Buck v. Clearbrook LLC

Filing 57

OPINION AND ORDER terminating as moot 50 Motion to Stay filed by Clearbrook, LLC, granting 48 Motion to Set Aside Default, granting 48 Motion to Set Aside Default Judgment, denying 48 Motion to Dismiss for Invalid Service of Process filed by Clearbrook, LLC,; Default Judgment is vacated; further directing the Clerk to Reopen the case. Case reopened. Further, Clearbrook, LLC answer is due on or before 6/27/2011. Signed by Honorable Paul K. Holmes, III on June 16, 2011. (cap)

IN THE UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF ARKANSAS
TEXARKANA DIVISION
RONALD BUCK
v.

PLAINTIFF
No. 4:10-CV-04103

CLEARBROOK, LLC

DEFENDANT
OPINION AND ORDER

Currently before the Court are Defendant Clearbrook, LLC’s
(“Clearbrook”) Motion to Set Aside Default and to Dismiss for
Invalid Service (Doc. 48) as well as Clearbrook’s Motion to Stay
Enforcement of Judgment and Request for Expedited Ruling (Doc. 50).
Also before the Court are Plaintiff Ronald Buck’s Responses in
Opposition to these motions (Docs. 53-54) and Clearbrook’s Replies
(Docs. 55-56). For the reasons reflected herein, the Court finds
that Clearbrook’s Motion to Set Aside Default should be GRANTED.
Because the Court resolves the default issue in this opinion, the
Court further finds that Clearbrook’s Motion to Stay Enforcement of
Judgment and Request for Expedited Ruling should be, and hereby is,
TERMINATED AS MOOT.
I. Background
No recitation of the facts is necessary in ruling on the
largely procedural issue herein presented. The Court will, however,
briefly recount the relevant procedural history. Plaintiff Ronald
Buck initially filed suit against the United States of America,
Federal

Emergency

Management

Agency

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(“FEMA”),

City

of

Hope,

Arkansas, and Clearbrook. Buck v. Fed. Emergency Mgmt. Agency, 2011
U.S. Dist. LEXIS 26099 (W.D. Ark. 2011)(the “original litigation”).
Buck’s claims against Clearbrook were severed from the original
litigation, by Court Order dated July 19, 2010. (Doc. 44). The
Court found that severance was appropriate based on Clearbrook’s
default, stating that “[b]ecause of this default, Plaintiff’s case
against Clearbrook will contain many procedural and substantive
differences than its case against the United States of America and
the City of Hope, Arkansas.” Id. The Court also reasoned that
allowing a severance would “serve the interests of expedition,
economy, and convenience” and “no parties will be prejudiced by the
severance.” Id.
A week after the claims were severed, on July 26, 2010, the
Court

granted

Buck’s

Motion

for

Default

Judgment

against

Clearbrook. (Docs. 45-46). Two months later, on September 27, 2010,
Clearbrook entered an appearance (Doc. 47) and filed its Motion to
Set Aside Default and to Dismiss for Invalid Service. (Doc. 48).
After the parties’ filings of responses and replies, no activity
occurred in this case until April 21, 2011, when the case was
reassigned to the undersigned.
II. Discussion
The Court first notes that there is a judicial preference for
adjudication on the merits. Oberstar v. F.D.I.C., 987 F.2d 494, 504
(8th Cir. 1993).

The determination regarding whether to set aside

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the entry of default is left to the court’s sound discretion. Hall
v. T.J. Cinnamon’s, Inc., 121 F.3d 434, 436 (8th Cir. 1997). The
Court, is however, bound by the Federal Rules, which provide that
“[t]he court may set aside an entry of default for good cause, and
it may set aside a default judgment under Rule 60(b).” Fed. R. Civ.
P. 55(c). Rule 60(b) allows for the setting aside of a default
judgment in certain enumerated circumstances, but also allows a
default judgment to be set aside for “any other reason that
justifies relief.” Fed. R. Civ. P. 60(b)(6). In the instant case,
there appear to be grounds for justifying relief from the default
judgment entered against Clearbrook in accordance with Fed. R. Civ.
Proc. 55(c) and 60(b), based on the common-defense doctrine, in
order to avoid incongruity and resulting injustice.
“When

co-defendants

are

similarly

situated,

inconsistent

judgments will result if one defendant defends and prevails on the
merits and the other suffers a default judgment.” Angelo Iafrate
Const., LLC v. Potashnick Const., Inc., 370 F.3d 715, 722 (8th Cir.
2004) (citing Frow v. De La Vega, 82 U.S. 552, 554 (1872)). Under
the common-defense doctrine,
‘defense

on

the

merits

that

“if an answering party asserts a
equally

applies

to

the

other

defendant,’ the success of the defense ‘operates as a discharge to
all the defendants.’” Id. (quoting Sutter v. Payne, 337 Ark. 330
(1999)).
In this case, Clearbrook was added as a defendant in Buck’s

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Second Amended Complaint (Doc. 19) filed on April 1, 2010. Before
Buck’s claims against Clearbrook were severed, Clearbrook’s then
co-defendant City of Hope, AR timely filed an Answer (Doc. 22), and
FEMA and the United States timely filed a Motion to Dismiss the
Second Amended Complaint. (Doc. 23). Upon the Court’s ultimate
denial of the motion to dismiss, on March 11, 2011, FEMA and the
United States timely filed their answer to the second amended
complaint on March 24, 2011. (Docs. 61, 62). These timely responses
assert defenses on the merits that equally apply to Clearbrook.
Under the common defense doctrine, such responses inure to the
benefit of Clearbrook.
Buck argues that the common-defense doctrine should not apply
to

Clearbrook

severance,

in

this

case,

Clearbrook’s

asserting

liability

can

that,
be

because

adjudicated

of

the

without

affecting the rights of the original co-defendants. The severance,
however, was granted, it seems, only to accommodate the default. In
moving for severance, Buck expressed concerns about his ability to
collect a judgment from Clearbrook as time passed. (Doc. 39, p. 2).
And the Court found that “[b]ecause of this default, Plaintiff’s
case

against

Clearbrook

will

contain

many

procedural

and

substantive differences than its case against [FEMA] and the City
of Hope, Arkansas.” (Doc. 44, pp. 1-2)(emphasis added). Buck argues
that the Court found that severing Clearbrook did not prejudice it,
or the other defendants. This argument ignores, however, that any

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lack of prejudice was explicitly based on the fact that Clearbrook
had defaulted. Such circular logic cannot be used to bolster Buck’s
claim that the common-defense doctrine should not apply here. In
other words, Clearbrook argues that default should be set aside
under the common-defense doctrine. Buck argues that the commondefense doctrine does not apply as is evidenced by the severance,
which was granted due to the default. The fact remains that the
allegations made by Buck in the second amended complaint are
consistently made against all “Defendants.” (Doc. 19). Buck also
asserts that his claims are “so related . . . that they form part
of the same case or controversy.” (Doc. 19, para. 6).
If the Court were to rigidly apply the common-defense doctrine
only in cases in which a plaintiff specifically alleged joint and
several liability, the spirit of the rule in Frow v. De La Vega, 82
U.S. 552 (1872), would be poorly served. In that opinion the Court
sought to avoid incongruity in the courts. Id. In this case, the
issues as to all original defendants are so intertwined that
incongruity would result if the Co-Defendants in the original
litigation were to succeed on the merits of their arguments, while
the default judgment was enforced against Clearbrook. See Gulf
Coast Fans, Inc. v. Midwest Electronics Importers, Inc., 740 F.2d
1499, 1511-12 (11th Cir. 1984) (reversing district court’s refusal
to grant defendant’s motion to set aside default judgment and
citing both Moore and Wright & Miller in noting that “even when

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defendants are similarly situated, but not jointly liable, judgment
should not be entered against a defaulting defendant if the other
defendant prevails on the merits.”).
In the original litigation, Magistrate Judge Barry Bryant
issued a Report and Recommendation (Docket no. 09-cv-04072, doc.
53), which was later adopted by the Court. (Docket no. 09-cv-04072,
doc. 53). In those documents, the Court found that a “critical
question”

remained

in

the

case

as

to

the

amount

of

control

exercised by the government over the physical performance of
Clearbrook. Id. at 1. Here, then, is one example of the looming
potential for incongruity in this case. If, for example, Clearbrook
is found to have acted as an employee of FEMA, the Court would
likely conduct an inquiry as to FEMA’s vicarious liability, which
would be contingent upon a finding as to Clearbrook’s liability. If
the

Court

were

Clearbrook

was

to

conclude,

not

in

negligent,

the

case

such

a

against
ruling

FEMA,
would

that
be

irreconcilable, at least in part, with the enforcement of a default
judgment against Clearbrook. Therefore, the Court finds that,
absent Clearbrook’s default, Clearbrook is similarly situated to
the United States, FEMA, and the City of Hope, such that the timely
responses of those parties, which address substantially identical
issues to those involving Clearbrook, should inure to Clearbrook’s
benefit under the common-defense doctrine.
The Court also finds that Buck will suffer no prejudice as a

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result of setting aside the default judgment, as he will continue
to be able to assert his claims against Clearbrook, just as he is
continuing to assert his claims against the co-defendants in the
original litigation. The Court notes, as well, that Clearbook
entered an appearance in September 2010 in the severed litigation well before the Court’s ruling on the Motion to Dismiss filed by
the

United

States

and

FEMA.

Thus,

even

had

Clearbrook

not

defaulted, and had it remained joined in the litigation of Buck’s
claims against FEMA and the City of Hope, the case would not have
materially advanced by the time Clearbrook entered its appearance.
Buck even cites the lack of discovery during the pendency of FEMA’s
second motion to dismiss as a factor that the Court should view in
its favor when ruling on the Motion to Sever. (Doc. 39, p. 3).
Furthermore, the Court finds that Clearbrook has set forth specific
facts to show the existence of a meritorious defense, supported by
the filing of the Affidavits of Bruce Wagner. (Doc. 48).
The

Court

finds

Clearbrook’s

arguments

regarding

invalid

service of process so as to warrant dismissal to be without merit.
Clearbrook’s Motion to Dismiss for Invalid Service of Process (Doc.
48), to the extent that it can be considered a separate motion or
a motion in the alternative, is therefore DENIED. Furthermore, the
Court declines to make a finding as to whether Clearbrook’s default
was the result of mistake or inadvertence. Instead, the Court finds
that the default judgment against Clearbrook should be set aside

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because the reasons outlined above otherwise justify relief in this
case. Fed. R. Civ. P. 60(b)(6).
II. Conclusion
It is the finding of the Court that the timely filings of the
City of Hope, AR, FEMA, and the United States accrue to the benefit
of

Clearbrook.

Accordingly,

Clearbrook’s

Motion

to

Set

Aside

Default (Doc. 48) is GRANTED.
IT IS THEREFORE ORDERED that the Default Judgment entered in
this case against Clearbrook be VACATED, and the Clerk of Court is
directed to REOPEN this matter.
IT IS FURTHER ORDERED that Clearbrook file its Answer on or
before June 27, 2011.

IT IS SO ORDERED this 16th day of June 2011.

/s/Paul K. Holmes, III
PAUL K. HOLMES, III
UNITED STATES DISTRICT JUDGE

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