SuperMedia LLC v. Law Offices of Malkin & Associates PLLC et al

Filing 27

ORDER, Defendants Law Offices of Malkin & Associates P.L.L.C. and Gregory Malkin P.L.L.C.' Answer 24 is stricken without prejudice; Defendants Law Offices of Malkin & Associates P.L.L.C. and Gregory Malkin P.L.L.C.' Response and Objection to Entry of Default 25 is overruled without prejudice; the 2/20/13 Scheduling Conference is vacated. Signed by Magistrate Judge Lawrence O Anderson on 2/11/13. (REW)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE DISTRICT OF ARIZONA

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Plaintiff,
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vs.
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Law Offices of Malkin & Associates
P.L.L.C., an Arizona professional limited )
liability company; and Gregory Malkin )
P.L.L.C., an Arizona professional limited )
)
liability company,
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Defendants.
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SuperMedia LLC, a Delaware limited
liability company, f/k/a Idearc Media
LLC,

No. CV-12-2491-PHX-LOA
ORDER

This matter arises on Plaintiff’s Application for Entry of Default against Defen-

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dants Law Offices of Malkin & Associates P.L.L.C. and Gregory Malkin P.L.L.C.

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(“Defendants Malkin”), Defendants Malkins’ unauthorized filing of an untimely Answer,

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and Defendants Malkins’ Response and Objection to Entry of Default. (Docs. 22, 24-25)

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I. Background

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On November 20, 2012, Plaintiff commenced this action, alleging causes of action

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for breach of contract, contractual breach of the implied covenant of good faith and fair

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dealing, and unjust enrichment. (Doc. 1) Defendants Malkins were properly served with

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the summons and complaint. (Docs. 8-9) All parties have consented to jurisdiction to a

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magistrate judge pursuant to 28 U.S.C. § 636(c). (Docs. 14, 16, 18) After denying

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Defendant Law Offices of Malkin & Associates P.L.L.C.’s Motion to Quash Service of

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process on January 22, 2013, the Court ordered Defendants Malkins to answer the

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Complaint on or before Friday, February 1, 2013. (Doc. 20) Anticipating Defendants

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Malkin would file a timely answer, the Court scheduled a Rule 16 scheduling conference

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for Wednesday, February 20, 2013. (Doc. 21) Defendants Malkin, however, failed to

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timely answer, and, on February 4, 2013, Plaintiffs filed an Application for Entry of

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Default against Defendants Malkin. (Doc. 22) The Clerk entered Defendants Malkins’

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defaults on February 5, 2013. (Doc. 23) No application or motion for default judgment

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has been filed to date. Three days later, on February 8, 2013, Defendants Malkin filed an

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untimely Answer, and a separate filing entitled Response and Objection to Entry of

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Default, which “[m]oves this Court to deny the Application for Default[,]” which has

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already been entered. (Docs. 24-25)

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II. Defaults and Default Judgments

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Entry of default and default judgment are governed by Federal Rule of Civil Pro-

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cedure 55. Obtaining a default judgment, however, is a two-step process. Sierra Nevada

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Corp. v. Digibee Mobile Ltd., 2012 WL 1298545, at *1 (D. Nev. April 13, 2012) (citing

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Eitel v. McCool, 782 F.2d 1470, 1471 (9th Cir. 1986)) (“Eitel apparently fails to under-

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stand the two-step process required by Rule 55.”) (citation omitted). First, Rule 55(a)

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provides that “[w]hen a party against whom a judgment for affirmative relief is sought

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has failed to plead or otherwise defend, and that failure is shown by affidavit or other-

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wise, the clerk must enter the party’s default.” An entry of default is what a clerk enters

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when the default is established by affidavit or otherwise. Rule 55(a), Fed.R.Civ.P.

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Second, after a clerk enters default, a party must seek entry of default judgment under

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Rule 55(b). Default is not freely granted, however, as a case should, whenever possible,

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be decided on the merits. TCI Group Life Ins. Plan v. Knoebber, 244 F.3d 691, 697 (9th

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Cir. 2001); see also Mattivi Bros. Leasing Inc. v. Ecopath Industries LLC, 2011 WL

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2784609, at *3 (D. Ariz. July 14, 2011) (citing United States v. Signed Personal Check

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No. 730, 615 F.3d 1085, 1091 n. 1 (9th Cir. 2010) (noting that Rule 60(b) is applied less

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liberally than Rule 55(c) because in the Rule 55(c) context “there is no interest in the

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finality of the judgment with which to contend”).
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After a defendant’s default has been entered by a clerk pursuant to Rule 55(a), a

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plaintiff may apply for a default judgment, and, depending upon the nature of relief

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requested in the complaint and whether the defendant has appeared in the action, judg-

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ment may be entered by the clerk or the court. See Rule 55(b)(1) and (2), Fed.R.Civ.P. If

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the party against whom a default judgment is sought has appeared in the action either

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personally or by a representative, that party or its representative must be served with

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written notice of the application at least 7 days before the hearing.1 Fed.R.Civ.P.

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55(b)(2); In re Roxford Foods, Inc., 12 F.3d 875, 879 (9th Cir. 1993). “No party in

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default is entitled to 55(b)(2) notice unless he has ‘appeared’ in the action.”. Wilson v.

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Moore & Associates, Inc., 564 F.2d 366, 368 (9th Cir. 1977). Entry of default judgment,

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however, is not a matter of right. Santa Fe Auto Ins. Co., Inc. v. Black, 2013 WL 310369,

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at *1 (D. Nev. Jan. 25, 2013) (citation omitted); Doe I v. Qi, 349 F.Supp.2d 1258, 1271

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(N.D. Cal. 2004). Entry of a default judgment “is entirely within the court’s discretion

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and may be refused where the court determines no justifiable claim has been alleged or

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that a default judgment is inappropriate for other reasons.” Qi, 349 F.Supp.2d at 1271

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(citing Draper v. Coombs, 792 F.2d 915, 924 (9th Cir. 1986); Aldabe v. Aldabe, 616 F.2d

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1089, 1092 (9th Cir. 1980)).

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“Pursuant to Rule 55(c), a district court may set aside the entry of default upon a

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showing of good cause.” Brandt v. American Bankers Ins. Co. of Florida, 653 F.3d 1108,

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1111 (9th Cir. 2011). “What constitutes ‘good cause’ is within the discretion of the trial

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court.” FOC Financial Ltd. Partnership v. National City Commercial Capital, 612

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F.Supp.2d 1080, 1082 (D. Ariz. 2009) (granting defendant’s motion to set aside default)

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(citing, inter alia, Haw. Carpenters’ Trust Funds v. Stone, 794 F.2d 508, 513 (9th Cir.

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1986) (“Rule 55(c) frees a court considering a motion to set aside a default entry from the

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Of course, Defendants Malkin have appeared in this action by Defendant Law
Offices of Malkin & Associates PLLC filing its Motion to Quash Service, doc., and by
Defendant Gregory Malkin P.L.L.C. filing its Consent to Jurisdiction before a United States
Magistrate Judge, doc. 18. See Greenfield v. Brenner, 2006 WL 776772, at (E.D. Wash.
March 23, 2006) (filing notices of appearance constitute an appearance under Rule 55(b)(2)).
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restraint of Rule 60(b) and entrusts determination to the discretion of the court.”). The

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burden of proof rests with the moving party. Franchise Holding II, LLC v. Huntington

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Restaurants Group, Inc., 375 F.3d 922, 926 (9th Cir. 2004). This burden, however, is not

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“extraordinarily heavy.” TCI Group Life, 244 F.3d at 700.

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The Ninth Circuit has identified three factors, which courts consistently refer to as

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the “Falk factors,” to consider in a Rule 55(c) good-cause analysis: “(1) whether the

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plaintiff will be prejudiced, (2) whether the defendant has a meritorious defense, and (3)

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whether culpable conduct of the defendant led to the default.” Brandt, 653 F.3d at 1111

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(quoting Falk v. Allen, 739 F.2d 461, 463 (9th Cir. 1984). Although the burden rests on

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the moving party, the factors are to be “liberally interpreted” in favor of setting aside

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default. Haw. Carpenters’Trust Funds v. Stone, 794 F.2d 508, 513 (9th Cir. 1986);

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Nilsson, Robbins, Dalgarn, Berliner, Carson & Wurst v. La. Hyrdrolec, 854 F.2d 1538,

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1546 (9th Cir. 1988) (per curiam) (“philosophy of modern federal procedure favors trials

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on the merits”) (citation omitted). A sufficient finding against the movant on any one

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factor negates good cause. See Franchise Holding II, 375 F.3d at 926 (“As these factors

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are disjunctive, the district court was free to deny the motion if any of the three factors

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was true.”) (internal citation omitted).

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III. Discussion

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Because Defendants Malkin have not timely moved for leave to file their Answer

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out of time pursuant to Rule 6(b), Fed.R.Civ.P., have been defaulted by the Clerk, and

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have not filed a motion requesting the Court’s leave to file or lodge an untimely Answer,

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it will be stricken sua sponte without prejudice. See Lamarr v. Chase Home Finance,

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LLC, 2008 WL 4057208 (N.D. Miss. Aug. 26, 2008); Canady v. Erbe Elektromedizin

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GmbH, 307 F.Supp.2d 2 (D.D.C. 2004). “The proper procedure at this point in the

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litigation is for Defendants to move to set aside the entry of default.” Arizona Opera Co.

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v. AZ Opera Co., 2007 WL 1958779, at *2 (D. Ariz. July 2, 2007). Like the scenario in

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Arizona Opera Co., although Defendants Malkin have nominally and implicitly moved to

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set aside the entry of default in their Response and Objection to Entry of Default, they
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have not articulated the proper standard under Rule 55(c), explained why their default

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should be set aside, and provided the requisite “[m]emorandum setting forth the points

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and authorities relied upon in support of the[ir] motion.” See LRCiv 7.2(b). Absent a

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written stipulation between the parties, the Court will only decide a motion to set aside

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Defendants Malkins’ defaults on the merits, using the proper legal standard and control-

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ling authorities. Thus, the Court will overrule without prejudice Defendants Malkins’

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Response and Objection to Entry of Default.

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Based on the foregoing,

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IT IS ORDERED that Defendants Law Offices of Malkin & Associates P.L.L.C.

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and Gregory Malkin P.L.L.C.’ Answer, doc. 24, is STRICKEN without prejudice.

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IT IS FURTHER ORDERED that Defendants Law Offices of Malkin &

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Associates P.L.L.C. and Gregory Malkin P.L.L.C.’ Response and Objection to Entry of

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Default, doc. 25, is OVERRULED without prejudice.

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IT IS FURTHER ORDERED that the February 20, 2013 Scheduling Conference
is hereby VACATED.
Dated this 11th day of February, 2013.

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