Kevin A. Fulton v. Bank of America N.A. et al

Filing 26

MINUTES (IN CHAMBERS) by Judge Christina A. Snyder RE: Defendant Bank of America, N.A.'s Motion to Set Aside Default 24 . The Court VACATES the default entered against defendant Bank of America, N.A. ("BANA"), as successor in interest to America's Wholesale Lender 13 , and directs BANA to file responsive pleadings forthwith. Court Reporter: Not Present. (gk)

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’
2:16-cv-04870-CAS-JC
Date February 6, 2017
KEVIN A. FULTON v. BANK OF AMERICA N.A. ET AL.

Present: The Honorable 
Catherine Jeang 
Deputy Clerk 

CHRISTINA A. SNYDER 

N/A 

Tape No.

Attorneys Present for Defendants: 

Not Present 
Court Reporter / Recorder

Attorneys Present for Plaintiffs: 

Not Present 
Not Present
(IN CHAMBERS) - DEFENDANT BANK OF AMERICA, N.A.’S
Proceedings:  
MOTION TO SET ASIDE DEFAULT (Dkt. 24, filed January 5,
2017)

The Court finds this motion appropriate for decision without oral argument. See
Fed. R. Civ. P. 78; C.D. Cal. Local Rule 7-15. Accordingly, the hearing date of February
13, 2017 is vacated, and the matter is hereby taken under submission.
I.

INTRODUCTION & BACKGROUND

On July 7, 2016 plaintiff Kevin A. Fulton, proceeding pro se, filed the instant
action against defendants Bank of America, N.A. (“BANA”), as successor in interest to
America’s Wholesale Lender, and Does 1–10 inclusive. Dkt. 1 (“Compl.”). Plaintiff
raises four claims: (1) declaratory relief, seeking a declaration that BANA and its
successors and/or assigns do not have any rights or interest in plaintiff’s Note or Deed of
Trust, or the property which authorized them to enforce the terms of the Note and Deed
of Trust; (2) the cancellation of the Deed of Trust, which plaintiff alleges is void for fraud
in the execution; (3) failure to comply with plaintiff’s notice to rescind in violation of 15
U.S.C. § 1601 et seq.; and (4) quiet title relating to violations of the Truth in Lending Act
(“TILA”). Id.1
On August 11, 2016, plaintiff requested an entry of default against BANA. Dkt.
10. On July 18, 2016, the Clerk entered a default pursuant to Federal Rule of Civil
Procedure 55(a). Dkt. 13. On August 25, 2016, plaintiff filed a motion for default
judgment against BANA. Dkt. 14.

1

The parties are familiar with plaintiff’s allegations, which are set forth in greater
detail in the Court’s prior order dated December 6, 2016. See dkt. 22.

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’
2:16-cv-04870-CAS-JC
Date February 6, 2017
KEVIN A. FULTON v. BANK OF AMERICA N.A. ET AL.

On December 6, 2016, the Court denied plaintiff’s motion for a default judgment
because plaintiff “failed to establish the merits of any alleged claim as would be required
for entry of default judgment against BANA.” Dkt. 22 at 9. The Court directed BANA
to file a motion to set aside the default, along with a proposed answer, within 30 days. Id.
On January 5, 2017, BANA filed a motion to set aside the default. Dkt. 24. To
date, BANA’s motion is unopposed.
II.

LEGAL STANDARD

Pursuant to Federal Rule of Civil Procedure 55(c), a court may set aside an entry of
default “for good cause.” The Court considers three elements when evaluating whether
“good cause” exists: (1) whether defendant’s culpable conduct led to the default,
(2) whether defendant has a meritorious defense, and (3) whether reopening the default
judgment would prejudice plaintiff. TCI Grp. Life Insurance Plan v. Knoebber, 244 F.3d
691, 696 (9th Cir. 2000) (noting that courts use the same factors to assess “good cause”
under Fed. R. Civ. P. 55(c) as for reviewing default judgments under Fed. R. Civ. P.
60(b)), overruled on other grounds by Egelhoff v. Egelhoff Ex rel. Breiner, 532 U.S. 141,
147 (2001). As a general rule, cases should be decided on the merits as opposed to by
default, and therefore “any doubts as to the propriety of a default are usually resolved
against the party seeking a default judgment.” James M. Wagstaffe, Federal Civil
Procedure Before Trial § 6-A (citing Pena v. Seguros La Comercial, S.A., 770 F.2d 811,
814 (9th Cir. 1985)). As such, the Court has broad discretion to overturn an entry of
default. Mendoza v. Wight Vineyard Management, 783 F.2d 941, 945–46 (9th Cir.
1986). This discretion is “more liberally applied” where a defendant seeks to set aside an
entry of default pursuant to Rule 55(c) rather than a default judgment pursuant to Rule
60(b). United States v. Signed Pers. Check No. 730 of Yubran S. Mesle, 615 F.3d 1085,
1091, n.1 (9th Cir. 2010). Moreover, the rules governing motions to set aside defaults
“are solicitous towards movants, especially those whose actions leading to the default
were taken without the benefit of legal representation.” Id. at 1089. Nonetheless, the
defaulting party carries the burden to demonstrate that the default should be set aside.
TCI Grp. Life Ins. Plan, 244 F.3d at 696.
III.

DISCUSSION

First, it appears that the default was not the result of BANA’s culpable conduct. A
movant’s conduct is culpable if he or she acted with bad faith, such as an “intention to

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’
2:16-cv-04870-CAS-JC
Date February 6, 2017
KEVIN A. FULTON v. BANK OF AMERICA N.A. ET AL.

take advantage of the opposing party, interfere with judicial decisionmaking, or otherwise
manipulate the legal process.” TCI Grp. Life Ins. Plan, 244 F.3d at 697. However,
where a defendant presents a “good faith explanation,” failure to respond does not, on its
own, amount to culpable conduct. Id. BANA has submitted a declaration from Brian
Hickman, a Representation Services Advisor for CT Corporation (“CT”), BANA’s
authorized agent for service of process. Dkt. 25 (“Hickman Decl.”). Hickman states that
he has searched CT’s business records and determined that CT was not served with a
summons. Id. ¶ 6. As a result, CT never notified BANA of any service by plaintiff. Id.
Furthermore, Hickman states that his search of the CT database for documents received
by CT containing the terms “Kevin” and “Fulton” returned only one result – this Court’s
December 6, 2016 order denying plaintiff’s motion for a default judgment. Id. ¶ 7. The
Court’s order was sent to CT by mail by the Clerk of the Court. See Hickman Decl. Ex.
B. Because it appears that CT was not served with the summons or complaint, the Court
finds that BANA’s failure to respond did not evidence any intent to take advantage of
plaintiff or to otherwise manipulate the legal process. The Court thus concludes that
BANA did not act culpably.
Second, the Court has already found, in its order denying of plaintiff’s motion for a
default judgment, that BANA has meritorious defenses to plaintiff’s claims. See dkt. 22
at 5–7.
Finally, the Court cannot discern any reason why vacating the default would
prejudice plaintiff. “To be prejudicial, the setting aside of a judgment must result in
greater harm than simply delaying resolution of the case. Rather, ‘the standard is whether
[plaintiff’s] ability to pursue his claim will be hindered.’” TCI Grp. Life Ins. Plan, 244
F.3d at 701 (quoting Falk v. Allen, 739 F.2d 461, 463 (9th Cir. 1984)). Examples of
tangible harm to a non-movant include loss of evidence or heightened discovery burdens.
Id. (citing Thompson v. American Home Assurance Co., 95 F.3d 429, 433–34 (6th Cir.
1996)). No such hardship exists here. Plaintiff is not prejudiced simply because he is
deprived of a “quick victory” and must litigate his claims on the merits. Bateman v.
United States Postal Service, 231 F.3d 1220, 1225 (9th Cir. 2000). Nothing suggests that
plaintiff’s pursuit of this action will be hindered or prejudicially delayed should the Court
set aside the default.
Accordingly, in light of the principle that cases should be decided on their merits,
the Court finds that BANA has satisfied all three of the elements required to set aside the
default.

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

Case No. 
Title 

CIVIL MINUTES – GENERAL
‘O’
2:16-cv-04870-CAS-JC
Date February 6, 2017
KEVIN A. FULTON v. BANK OF AMERICA N.A. ET AL.

IV.

CONCLUSION

In accordance with the foregoing, the Court VACATES the default entered against
BANA and directs BANA to file responsive pleadings forthwith.
IT IS SO ORDERED.
00 
Initials of Preparer

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: 

00 

CMJ 

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