Hunt v. Reyes et al

Filing 47

ORDER signed by Magistrate Judge Craig M. Kellison on 07/27/11 ordering the motion to set aside the entry of default 43 is granted. The motion for default judgment 42 is moot. (Plummer, M)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE EASTERN DISTRICT OF CALIFORNIA

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MICHAEL A. HUNT

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Plaintiff,

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vs.

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M. REYES, et al.

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CIV S-08-0181 MCE CMK (TEMP) P

Defendants.

ORDER
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Plaintiff is a state prisoner proceeding with counsel in an action under 42 U.S.C. §
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1983. On December 6, 2010, the court issued an order granting plaintiff’s motion to amend his
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complaint and stating that his second amended complaint was deemed filed as of May 21, 2010.
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See Order (Docket No. 38). Defendants Rios and Fields did not respond to the second amended
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complaint, so the court ordered the Clerk Of Court to enter default against them. See Docket
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Nos. 40 and 41. Plaintiff then moved for a default judgment. Defendants Rios and Fields have
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moved to set aside the entry of default.
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Fed.R.Civ.P. 55(c) authorizes a court to set aside entry of default for “good
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cause.” “The court’s discretion is especially broad where, as here, it is entry of default that is
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being set aside, rather than a default judgment.” O’Connor v. State of Nev., 27 F.3d 357, 364 (9th

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Cir. 1994).
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A court determines the existence of good cause for removing a default by

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considering the following factors: (1) whether the party seeking to set aside the entry of default

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engaged in culpable conduct that led to the default; (2) whether there is any meritorious defense

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to plaintiff’s claims; or (3) whether setting aside the entry of default will prejudice the plaintiff.

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U.S. v. Signed Personal Check No. 730 of Yubran S. Mesle, 615 F.3d 1085, 1091 (9th Cir. 2010).

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“[A] finding that any one of these factors is true is sufficient reason for the district court to set

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aside the entry of default.” Id. “[J]udgment by default is a drastic step appropriate only in

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extreme circumstances; a case should, whenever possible, be decided on the merits.” Id.

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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 an action and intentionally failed to answer.” Signed Personal Check, 615 F.3d at

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1092. In contrast to requiring a separate showing of bad faith by an ordinary defendant who fails

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to answer, “[w]hen considering a legally sophisticated party’s culpability in a default, an

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understanding of the consequences of its actions may be assumed, and with it, intentionality.” Id.

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at 1093 (citing Direct Mail Specialists, Inc. v. Eclat Computerized Tech., Inc., 840 F.2d 685, 690

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(9th Cir. 1988)(upholding the district court’s refusal to vacate a default judgment because

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defendant’s president, “as a lawyer, was presumably well aware of the dangers of ignoring

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service of process”)).

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“A defendant seeking to vacate a default judgment must present specific facts that

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would constitute a defense. But the burden on a party seeking to vacate a default judgment is not

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extraordinarily heavy. All that is necessary to satisfy the ‘meritorious defense’ requirement is to

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allege sufficient facts that, if true, would constitute a defense: ‘the question whether the factual

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allegation is true’ is not to be determined by the court when it decides the motion to set aside the

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default. Rather, that question ‘would be the subject of the later litigation.’” Signed Personal

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Check, 615 F.3d at 1094 (internal citations omitted).

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“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
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pursue his claim will be hindered.’” TCI Group Life Ins. Plan v. Knoebber, 244 F.3d 691, 701

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(9th Cir. 2001). “[T]he delay must result in tangible harm such as loss of evidence, increased

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difficulties of discovery, or greater opportunity for fraud or collusion.” Id. (citation omitted).

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Defendants argue that the default should be set aside because their failure to

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answer was due solely to their counsel’s inadvertence. They state that their counsel

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“misunderstood the Courts [sic] order on [sic] December 6, 2010.” Motion at 5 (Docket No. 43).

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They state that their counsel mistakenly believed that the order of December 6 only gave plaintiff

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leave to file an amended complaint and that “[s]ince December 6, 2010, Defense counsel ha[d]

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mistakenly been waiting for Plaintiff to file another amended complaint.” Id. This

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“misunderstanding” occurred in the face of the court’s very plain meaning in granting the motion

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to amend the complaint – a motion to which, it bears noting, defendants did not respond. The

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court’s December 6 order clearly states, “[t]he second amended complaint, filed May 21, 2010,

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shall... be accepted.” Order at 2 (Docket No. 38). The docket entry for that order states that “the

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second amended cmplt is DEEMED filed as of 5/21/10.” The court accepts defendants’

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representation that their failure to answer the complaint was due to counsel’s inadvertence. The

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court notes, though, that counsel’s inadvertence was unreasonable.

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The court need not inquire into whether defendants’ counsel’s unreasonable

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reading of the court’s order and docket meets the definition of “culpable conduct” that would

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justify leaving the default in place. As stated above, the court must also ask whether plaintiff has

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suffered any prejudice in the delay caused by defendants’ failure to answer and whether there are

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any meritorious defenses. “[A] finding that any one of these factors is true is sufficient reason

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for the district court to set aside the entry of default.” Signed Personal Check, 615 F.3d at 1092.

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Indeed, there is no prejudice to plaintiff in setting aside the default. Moreover, defendants filed

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an answer to the second amended complaint on the same day they moved to set aside the entry of

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default. The answer presents, on its face, meritorious defenses. Therefore defendants’ motion to

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set aside the entry of default will be granted. Plaintiff’s motion for entry of default is moot.
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Accordingly, IT IS HEREBY ORDERED that:

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1. The motion to set aside the entry of default (Docket No. 43) is granted.

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2. The motion for default judgment (Docket No. 42) is moot.

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DATED: July 27, 2011

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______________________________________
CRAIG M. KELLISON
UNITED STATES MAGISTRATE JUDGE

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hunt0181.ord

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