Cincinnati Insurance Company v. Amerisure Insurance Company

Filing 24

ORDER granting 19 Motion to Set Aside Default. The Clerk's Entry of Default as to Amerisure Insurance Company (Doc. 15 ) is SET ASIDE. Signed by Chief Judge William H. Steele on 8/8/2011. (tgw)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ALABAMA
SOUTHERN DIVISION

CINCINNATI INSURANCE COMPANY,
Plaintiff,
v.
AMERISURE INSURANCE COMPANY,
Defendant.

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CIVIL ACTION 11-0271-WS-M

ORDER
This matter comes before the Court on the Motion to Set Aside Default (doc. 19) filed by
defendant, Amerisure Insurance Company. The Motion has been briefed and is ripe for
disposition.1
On July 12, 2011, the Court entered an Order (doc. 14) granting plaintiff Cincinnati
Insurance Company’s Application for Entry of Default against Amerisure. Cincinnati had
properly served process on Amerisure on June 7, 2011, yet Amerisure had not answered,
appeared or otherwise defended in this action.2 A Clerk’s Entry of Default (doc. 15) followed on
1

In briefing this Motion, Amerisure filed a 24-page reply (doc. 23). Not only is the
reply more voluminous than both sides’ principal briefs combined, but it is also well in excess of
the 15-page cap imposed on reply briefs pursuant to Local Rule 7.1(b). Defendant has not
requested leave to exceed the page limitation, nor can the Court discern any reasonable basis for
surpassing that limit in this case. Those page limitations exist for good reason, namely to compel
litigants to distill the essence of their claims and defenses, to winnow out and discard their
weaker arguments in favor of their stronger ones, to present their respective positions in a
concise manner, and to avoid squandering judicial and litigant resources on wading through
unnecessarily verbose submissions. The Local Rule is intended to promote the interests of both
litigants and the Court in efficient administration of justice. Accordingly, defendant’s Reply
(doc. 23) is stricken insofar as it exceeds the maximum page limits authorized by Local Rule
7.1(b), with neither leave of court nor good cause.
2

Cincinnati had submitted its Application for Entry of Default just one day after
the Rule 12 deadline for Amerisure to file an answer. Moreover, while Cincinnati’s counsel had
ongoing dealings with Amerisure’s counsel on this matter prior to the filing of the Complaint,
Cincinnati’s counsel did not pick up the phone and notify their counterparts of the impending
(Continued)

that very same day. One day later, on July 13, 2011, Amerisure filed its Answer (doc. 16) and
Amended Answer (doc. 17), apparently unaware that default had already been entered against it.
When the Court entered an Order (doc. 18) on July 13 explaining that Amerisure’s tardy
responsive pleadings were ineffectual given that defendant is laboring under a default, Amerisure
responded on July 14 by filing its Motion to Set Aside Default.
In this Circuit, “defaults are seen with disfavor because of the strong policy of
determining cases on their merits.” Florida Physician’s Ins. Co. v. Ehlers, 8 F.3d 780, 783 (11th
Cir. 1993); see also In re Worldwide Web Systems, Inc., 328 F.3d 1291, 1295 (11th Cir. 2003)
(similar). In that regard, the Eleventh Circuit has recognized that “a technical error or a slight
mistake by a party’s attorney should not deprive the party of an opportunity to present the merits
of his claim.” Ehlers, 8 F.3d at 783 (citation omitted). Indeed, “[d]efaults are reserved for rare
occasions and when doubt exists as to whether a default should be granted or vacated, the doubt
should be resolved in favor of the defaulting party.” Canfield v. VSH Restaurant Corp., 162
F.R.D. 431, 434 (N.D.N.Y. 1995).
Under the Federal Rules of Civil Procedure, “[t]he court may set aside an entry of default
for good cause.” Rule 55(c), Fed.R.Civ.P. In evaluating the presence or absence of good cause,
courts undertake a flexible inquiry based on the particular circumstances presented, considering
such factors as whether the default was willful, whether the plaintiff would be prejudiced if the
default were set aside, and whether the defendant has a meritorious defense. See, e.g., Compania
Interamericana Export-Import, S.A. v. Compania Dominicana de Aviacion, 88 F.3d 948, 951
(11th Cir. 1996). “[I]f a party willfully defaults by displaying either an intentional or reckless
disregard for the judicial proceedings, the court need make no other findings in denying relief.”
Id. at 951-52.

default application. See, e.g., Stone v. City of Mobile, 2007 WL 505057, *3 (S.D. Ala. Feb. 13,
2007) (“[P]erhaps a more prudent, and certainly more efficient, response by plaintiff’s counsel
would have been to contact his counterpart counsel to advise of his intention to seek entry of
default unless an answer were filed immediately. Yet plaintiff’s counsel did not do so. The
Court strongly suspects that a simple phone call would have obviated the need for the
Application for Entry of Default, or the subsequent expenditure of litigant and judicial resources
in the ensuing litigation to set aside the default.”).

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Notwithstanding Cincinnati’s arguments to the contrary, Amerisure has plainly made an
adequate showing of good cause for its default. Amerisure explains that the default occurred
because of a calendaring error by its attorney, and miscommunication between client and
attorney. (See Kile Turner Aff. (doc. 19, Exh. 3), ¶¶ 7, 10.) Defendant correctly acknowledges
that such an omission “is certainly no shining example of professional efficiency.” (Doc. 19, at
6.)3 However, it is also a far cry from the kind of willfulness or reckless disregard of federal
judicial proceedings that Cincinnati portrays it as being. By all appearances, defendant’s failure
to file an answer in a timely manner was the product of a series of mistakes and missteps that,
while unfortunate and preventable, cannot reasonably be classified as evincing willful disregard
for this Court or these proceedings. If Amerisure or its counsel were thumbing their noses at
these proceedings, they would not have (i) prepared draft pleadings before the 21-day period for
answering expired, (ii) filed an answer two weeks after the fact without knowledge of the Clerk’s
Entry of Default, or (iii) moved to set aside the default just two days after it was entered. Such
conduct is flatly inconsistent with the characterization of willful disrespect for these proceedings
that Cincinnati ascribes to Amerisure.
Furthermore, the parties’ back-and-forth briefing on the specific coverage defenses
identified by Amerisure for the underlying dispute clearly reflect that defendant has met the low
threshold of coming forward with a meritorious defense that might affect the outcome at trial.
See, e.g., Mohamad v. Rajoub, 634 F.3d 604, 606 (D.C. Cir. 2011) (for purposes of setting aside
3

In the same vein, it bears noting that this Court had endeavored via a Show Cause
Order (doc. 13) entered on July 5, 2011 to give Amerisure an opportunity to correct its failure to
answer timely. Even though the Clerk of Court mailed a copy of that Order to defendant through
the same agent for service of process on which service had originally been effected, Amerisure
insists that it never saw or received the Show Cause Order prior to the entry of default a week
later. Even there, however, Amerisure’s hands are not entirely clean. By its own reckoning,
defendant created (or allowed to exist) a situation in which there is confusion as to which of two
entities is its proper agent for service of process in Alabama. To avoid similar failings in service
and receipt of critical pleadings and court orders in the future, the Court strongly encourages
Amerisure to take whatever steps are necessary to ensure that it has properly designated its
desired registered agent with the Alabama Secretary of State, and that the state agency’s online
records accurately reflect that designation. As things stand, Amerisure’s filings exhibit needless
uncertainty and ambiguity as to who its registered agent in this state actually is, which appears to
have directly resulted in it not receiving the Show Cause Order that would have enabled
Amerisure to avoid entry of default altogether.

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a default, “allegations are meritorious if they contain even a hint of a suggestion which, proven at
trial, would constitute a complete defense”) (citations omitted); United States v. $22,050.00
United States Currency, 595 F.3d 318, 326 (6th Cir. 2010) (opining that “likelihood of success is
irrelevant” for purposes of this inquiry and that what matters is “whether a well-stated defense, if
sustained, would change the outcome”). Finally, in its brief opposing Rule 55(c) relief for
Amerisure, Cincinnati does not even attempt to articulate any prejudice that it might sustain if
the default were set aside but instead weakly states that “Plaintiff should not have to endure any
type of delay” (doc. 22, at 8) in this matter.4
For all of the foregoing reasons, the Court in its discretion finds that defendant has made
an adequate showing of good cause under Rule 55(c) to warrant setting aside the default.
Accordingly, defendant’s Motion to Set Aside Default (doc. 19) is granted, and the Clerk’s
Entry of Default (doc. 15) is set aside pursuant to Rule 55(c), Fed.R.Civ.P. Defendant having
already filed an Answer, a Preliminary Scheduling Order will be entered to get this case on track
and progressing towards preparation of a Rule 26(f) report and entry of a Rule 16(b) scheduling
order without further delay.
DONE and ORDERED this 8th day of August, 2011.
s/WILLIAM H. STEELE
CHIEF UNITED STATES DISTRICT JUDGE

4

As noted previously, a simple phone call from plaintiff’s counsel to defendant’s
counsel back in late June in all likelihood would have resulted in an answer being filed
immediately thereafter, a Preliminary Scheduling Order being entered by the court in early July,
and this action being well on its way today, instead of remaining bogged down in Rule 55
proceedings some six weeks later.

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