The Bank of New York Mellon v. Davidson et al

Filing 63

ORDER Setting Aside Default, signed by Magistrate Judge Erica P. Grosjean on 06/01/2021. (Maldonado, C)

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UNITED STATES DISTRICT COURT

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FOR THE EASTERN DISTRICT OF CALIFORNIA

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THE BANK OF NEW YORK MELLON
FKA THE BANK OF NEW YORK, AS
TRUSTEE FOR THE BENEFIT OF THE
CERTIFICATE HOLDERS OF THE
CWABS INC., ASSET-BACKED
CERTIFICATES, SERIES 2006-SD3,

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No. 1:17-cv-01335-DAD-EPG
ORDER SETTING ASIDE DEFAULT
(ECF Nos. 53, 60)

Plaintiff,

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v.

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BRENDA L. DAVIDSON, et al.,

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Defendants.

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Pending before the Court is pro se Defendant Brenda Davidson’s “notice of motion and

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motion to set aside default and default judgement, memorandum of points and authorities and
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declaration of defendant.” (ECF No. 60). Plaintiff, The Bank of New York Mellon, has responded

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to the motion. (ECF No. 62). For the reasons given below, the Court will grant Defendant
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Davidson’s motion to the extent that it seeks to set aside the clerk’s entry of default.1 (ECF No.

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53). See Rollins v. Wink Labs, Inc., No. 3:20-CV-01220-YY, 2020 WL 9598936, at *1 (D. Or.
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Dec. 11, 2020) (noting that a motion to set aside an entry of default is a non-dispositive motion on
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which a magistrate can rule by order).
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While Defendant Davidson’s motion also seeks to aside a “default judgement,” no default judgment was entered in
this case, only a clerk’s entry of default. (See ECF Nos. 53, 60). Thus, the Court need not address this request.
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I.

BACKGROUND
This case concerns Defendant Davidson’s alleged failure to repay loans backed by a

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mortgage and tax liens on the mortgaged property. On October 4, 2017, the United States

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removed this case from the Superior Court of California, County of Tulare, under 28 U.S.C.

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§§ 1442(a)(1) and 1444. (ECF No. 1). Defendant Davidson filed an answer on February 8, 2018.

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(ECF No. 12).

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On April 2, 2019, Plaintiff and the United States filed a stipulation concerning the priority

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of the United States’ lien. (ECF No. 26). On August 15, 2019, the District Court adopted the

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stipulation and terminated the United States from this action. (ECF No. 38, p. 16).

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On December 30, 2019, Plaintiff filed a first amended complaint, which named Davidson,

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the City of Porterville, and SRI, Inc. as defendants. (ECF No. 45). The United States was not

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named as a party.

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Defendant Davidson did not file an answer to the first amended complaint. More than a

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year later, Plaintiff filed a request for clerk’s entry of default under Federal Rule of Civil 55(a).

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(ECF No. 51). The Clerk entered default on March 30, 2021. (ECF No. 53).

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Shortly thereafter, the Court held a status conference and explained the need for

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Defendant Davidson to file an answer to the first amended complaint and to move to set aside the

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entry of default should she intend to continue to participate in this case. (ECF No. 55, p. 4).

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On May 7, 2021, this Court entered findings and recommendations, recommending that

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this action be remanded to state court, reasoning that the original bases for jurisdiction, 28 U.S.C.

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§§ 1442(a)(1) and 1444, depended on the United States being a party to this action. (ECF No. 58,

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p. 4). The Court further noted that it “sees no reason to exercise supplemental jurisdiction and

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recommends declining to do so.” (Id.). No party objected to the Court’s findings and

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recommendations.

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On May 13, 2021, Defendant Davidson filed her answer to the first amended complaint

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and filed the pending motion to set aside the clerk’s entry of default. (ECF Nos. 59, 60). In its

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response, Plaintiff makes no merits argument as to why Defendant Davidson’s motion to set aside

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the default should be denied; instead, it argues that the Court lacks subject matter jurisdiction to
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adjudicate the motion to set aside the default now that the United States has been terminated from

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the action. (ECF No. 62). Plaintiff cities no authority in support of this position.

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II.

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JURISDICTION TO RULE ON MOTION
This Court currently exercises supplemental jurisdiction over the state law claims pursuant

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to 28 U.S.C. § 1367(a), which provides that once a federal court has original jurisdiction over an

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action, it has “supplemental jurisdiction over all other claims that are so related to claims in the

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action within such original jurisdiction that they form part of the same case or controversy under

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Article III of the United States Constitution.” While a district court “may decline to exercise

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supplemental jurisdiction over a claim” when “the district court has dismissed all claims over

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which it has original jurisdiction” under 28 U.S.C. § 1367(c), a court does not automatically lose

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supplemental jurisdiction when the federal claims are dismissed.

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While the undersigned has recommended that the case be remanded, and that the District

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Court decline to exercise supplemental jurisdiction going forward, the District Court has not yet

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done so. This case thus remains before this Court and this Court retains jurisdiction.

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Accordingly, it may set aside the default and will do so.

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Further, it is worth noting that Plaintiff’s current position—that this Court lacks subject-

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matter jurisdiction to set aside the default due to the dismissal of the United States—is belied by

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Plaintiff’s litigation history. On August 15, 2019, the United States was dismissed from this case.

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(ECF No. 38, p. 16). Since then, Plaintiff has moved to amend its complaint to add SRI, Inc. as a

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defendant. (See ECF Nos. 40, 41). Plaintiff then filed its first amended complaint after being

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granted leave to do so. (ECF Nos. 44, 45). And, perhaps most notably, Plaintiff requested and

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obtained the clerk’s entry of default as to Defendant Davidson. (ECF Nos. 51, 53). Certainly,

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Plaintiff is not arguing that the Court lacked jurisdiction for the Clerk to enter that default. In

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fact, the Court retained jurisdiction under 28 U.S.C. § 1367 during this time period and retains

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jurisdiction now to set aside that default, unless and until the District Court remands this action to

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the state court.

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III.

THE DEFAULT

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Under Federal Rule of Civil Procedure 55(c), “the court may set aside an entry of default

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for good cause.” “To determine ‘good cause’, a court must ‘consider[ ] three factors: (1) whether

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[the party seeking to set aside the default] engaged in culpable conduct that led to the default; (2)

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whether [it] had [no] meritorious defense; or (3) whether reopening the default judgment would

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prejudice’ the other party.” United States v. Signed Pers. Check No. 730 of Yubran S. Mesle, 615

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F.3d 1085, 1091 (9th Cir. 2010) (alterations in original) (quoting Franchise Holding II, LLC. v.

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Huntington Restaurants Grp., Inc., 375 F.3d 922, 925-26 (9th Cir. 2004)). “This standard, which

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is the same as is used to determine whether a default judgment should be set aside under Rule

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60(b), is disjunctive, such that a finding that any one of these factors is true is sufficient reason

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for the district court to refuse to set aside the default.” (Id.). Moreover, when the moving party

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seeks timely relief from default “and the movant has a meritorious defense, doubt, if any, should

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be resolved in favor of the motion to set aside the default so that cases may be decided on their

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merits.” Mendoza v. Wight Vineyard Mgmt., 783 F.2d 941, 945-46 (9th Cir. 1986) (quoting

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Schwab v. Bullock’s Inc., 508 F.2d 353, 355 (9th Cir. 1974)).
After considering the above factors, the Court will set aside the clerk’s entry of default.

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Defendant Davidson, acting pro se, failed to respond to the first amended complaint because she

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did not know that a response was required. (ECF No. 60). Davidson had already answered

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Plaintiff’s original complaint and did not understand that she had to also file an answer to the

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amended complaint. Since being informed of this requirement, she has answered the first

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amended complaint and filed this motion to set aside the default, indicating her willingness to

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participate in this case going forward. Further, the Court cannot conclude that Defendant

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Davidson lacks any meritorious defense. Lastly, given Plaintiff’s delay in seeking default and the

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pending remand to state court, there is no prejudice to Plaintiff.

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IV.

ORDER

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Accordingly, based on the foregoing, IT IS HEREBY ORDERED that Defendant

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Davidson’s motion to set aside the clerk’s entry of default (ECF No. 60) is granted. The entry of

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default (ECF No. 53) is set aside.

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IT IS SO ORDERED.
Dated:

June 1, 2021

/s/
UNITED STATES MAGISTRATE JUDGE

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