Smith v. Smith

Filing 12

ORDER finding as moot 9 Motion for Default Judgment; granting 11 Motion to Set Aside Default. Defendant shall file his answer on or before 5/9/2014. Signed by Judge David G Campbell on 4/23/2014.(DGC, nvo)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE DISTRICT OF ARIZONA

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Yolanda Denise Smith,
Plaintiff,

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ORDER

v.

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No. CV-13-02611-PHX-DGC

Joseph Leynard Smith,

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Defendant.

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Before the Court are Plaintiff’s motion for default judgment (Doc. 9) and

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Defendant’s motion to vacate the clerk’s entry of default (Doc. 11). The Court will

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construe Defendant’s motion as a response to Plaintiff’s motion and as a motion to set

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aside the entry of default under Federal Rule of Civil Procedure 55(c). The Court will

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grant Defendant’s motion and deny Plaintiff’s motion for default judgment as moot.

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I.

Background.

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On December 20, 2013, Plaintiff Yolanda Smith filed a complaint for breach of

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contract. Doc. 1. On February 4, 2014, Plaintiff requested that the Clerk enter default

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against Defendant pursuant to Rule 55(a) for failing to plead or otherwise defend the

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action. Doc. 7. The Clerk entered default on February 5, 2014. Doc. 8. That same day,

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Plaintiff filed a motion for default judgment. Doc. 9. On March 3, 2014, Defendant filed

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a notice of appearance and motion to vacate default judgment. Doc. 10. On March 25,

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2014, he filed an amended notice of appearance and motion to vacate the clerk’s entry of

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default. Doc. 11.

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II.

Legal Standard.

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Federal Rule of Civil Procedure 55(c) allows a court to “set aside an entry of

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default for good cause[.]” Fed. R. Civ. P. 55(c). Courts consider three factors in

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deciding whether good cause exists: (1) whether the moving party engaged in culpable

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conduct; (2) whether the moving party has a meritorious defense; and (3) whether setting

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aside the default will prejudice the non-moving party.

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Knoebber, 244 F.3d 691, 696 (9th Cir. 2001) (citations omitted). The moving party bears

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the burden of proving that the three factors weigh in favor of setting aside default.

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Franchise Holding II, LLC. v. Huntington Rest. Grp., 375 F.3d 922, 926 (9th Cir. 2004).

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This burden, however, is not “extraordinarily heavy.” TCI Grp., 244 F.3d at 700. “A

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case should, whenever possible, be decided on the merits.” Id. at 697.

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III.

TCI Grp. Life Ins. Plan v.

Analysis.

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A.

Culpable Conduct.

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“A defendant's conduct is culpable if he has received actual or constructive notice

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of the filing of the action and intentionally failed to answer.” Id. at 697 (citations

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omitted). Intentional conduct, in this context, must rise to the level of conduct which is

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willful, deliberate, or done in bad faith. Id. at 697-98. Defendant asserts that he failed to

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respond to Plaintiff’s complaint because he was unaware that a breach of contract claim

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had been filed against him in this Court. Doc. 11 at 1-2. Proceeding pro se at the time,

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Defendant asserts that all previous legal matters between him and Plaintiff had occurred

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in state court. Id. at 2. Thus, when he received an envelope from Plaintiff containing

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legal documents, he failed to distinguish between the Petition for Modification of

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Custody and Child Support filed in state court and the breach of contract claim filed in

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this Court. Id. at 1-3. Defendant therefore filed a response only in state court. Id. at 4.

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Defendant asserts that he did not learn about the complaint filed in this Court until after

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he had secured legal counsel on February 25, 2014. Id. at 4-5. Because nothing about

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Defendant’s conduct suggests a “devious, deliberate, willful, or bad faith failure to

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respond,” the Court finds that his conduct was not culpable. TCI Grp., 244 F.3d at 698.

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B.

Meritorious Defense.

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“All that is necessary to satisfy the ‘meritorious defense’ requirement is to allege

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sufficient facts that, if true, would constitute a defense[.]” United States v. Signed

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Personal Check No. 730 of Yubran S. Mesle, 615 F.3d 1085, 1094 (9th Cir. 2010)

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(citation omitted).

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regarding the division of certain property, including the disposition of a residence in

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Scottsdale. Doc. 1, ¶¶ 6, 7, 9. Plaintiff alleges that Defendant breached the contract by

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failing to participate in the refinancing of the residence and by failing to pay for repairs.

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Doc. 1, ¶¶ 13, 16. Defendant asserts that did not breach the contract because he signed

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and transferred all the documents pertaining to the refinancing of the residence. Doc. 11

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at 4. Defendant also contends that he has not received repair estimates, request for

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reimbursement, or a demand for payment from Plaintiff. Id. at 4-5. These allegations,

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accepted as true, satisfy the meritorious defense requirement.

Plaintiff alleges that she entered into a contract with Defendant

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C.

Prejudice.

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“To be prejudicial, the setting aside of a judgment must result in greater harm than

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simply delaying resolution of the case.” TCI Grp., 244 F.3d at 701. “[T]he standard is

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whether [Plaintiff's] ability to pursue [her] claim will be hindered.”

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omitted). Plaintiff asserts that, absent a default judgment, Plaintiff will have “no means

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of pursuing Defendant for his violations of the Contract.” Doc. 9 at 5-6. Plaintiff can

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pursue Defendant for the alleged breach of contract by proving the merits or her claim.

Id. (citations

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This Circuit’s “rules for determining when a default should be set aside are

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solicitous towards movants,” especially where, as in this case, the “actions leading to the

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default were taken without the benefit of legal representation.” Mesle, 615 F.3d at 1089.

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Whenever possible, a case should be decided on the merits and judgment by default is

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“appropriate only in extreme circumstances[.]” Id. Because extreme circumstances do

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not exist here, the Court will set aside default.

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IT IS ORDERED:

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1.

The motion to set aside default (Doc. 11) is granted.

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Plaintiff's motion for default judgment (Doc. 9) is denied as moot.

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3.

Defendant shall file his answer on or before May 9, 2014.

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Dated this 23rd day of April, 2014.

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