Johnson v. Giovanni Holdings, et al.

Filing 12

ORDER signed by Chief Judge Morrison C. England, Jr on 10/1/2014 ORDERING 7 given that Defendant bears the burden of establishing good cause to set aside an entry of default, the Court DENIES without prejudice the parties' request to set aside the entry of default as to Defendant Giovanni Holdings. 11 (Reader, L)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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SCOTT JOHNSON,

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No. 2:14-cv-01748-MCE-AC

Plaintiff,
v.

ORDER

GIOVANNI HOLDINGS, et al.,

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Defendants.

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On July 24, 2014, Plaintiff Scott Johnson (“Plaintiff”) filed the instant action

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against defendants Giovanni Holdings (“Defendant”) and Charleanne Cannon

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(“Cannon”). ECF No. 1. On August 7, 2014, a Summons as to Defendant was returned

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as executed on August 1, 2014. ECF No. 4. Because Defendant failed to timely

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respond to the Complaint, Plaintiff requested, and the Clerk of the Court issued, an Entry

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of Default on September 8, 2014. See ECF Nos. 6-7. On September 18, 2014,

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Defendant filed an untimely Answer. Now, through a joint stipulation, the parties seek to

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set aside the entry of default as to Defendant.

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Federal Rule of Civil Procedure 55(c)1 provides that “[f]or good cause shown the
court may set aside an entry of default and, if a judgment by default has been entered,

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All further references to “Rule” or “Rules” are to the Federal Rules of Civil Procedure unless
otherwise stated.

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may likewise set it aside in accordance with Rule 60(b).” The Ninth Circuit has indicated

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that a district court’s discretion is “especially broad where . . . it is entry of default that is

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being set aside, rather than a default judgment.” Mendoza v. Wight Vineyard Mgmt.,

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783 F.2d 941, 945 (9th Cir. 1986) (internal citation omitted); see also Brady v. United

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States, 211 F.3d 499, 504 (9th Cir. 2000). The defaulting party bears the burden of

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establishing “good cause” to set aside an entry of default. Franchise Holding II, LLC v.

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Huntington Rests. Group, Inc., 375 F.3d 922, 925 (9th Cir. 2004). In determining

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whether there is good cause to set aside entry of default, the court considers:

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(1) whether the defaulting party engaged in culpable conduct which led to the default;

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(2) whether the defaulting party lacks a meritorious defense; and (3) whether setting

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aside the default would prejudice the party who obtained it. Mendoza, 783 F.2d at 946.

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These factors are disjunctive; therefore, the court may deny a Rule 55(c) motion if it finds

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present any one of the foregoing factors. Franchise Holding, 375 F.2d at 926 (internal

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citation omitted). However, where timely relief is sought from a default and the movant

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has a meritorious defense, doubt, if any, should be resolved in favor of the motion to set

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aside the default so that cases may be decided on their merits. Mendoza, 783 F.2d at

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946. The moving party need not file a noticed motion to set aside the entry of default;

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however, it must set forth sufficient rationale to demonstrate good cause in a manner

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permitted by this Court’s Local Rules and the Federal Rules of Civil Procedure, such as

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a stipulation, an ex parte application, or a noticed motion. See Judson Atkinson

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Candies, Inc. v. Latini-Hohberger Dhimantec, 529 F.3d 371, 385-86 (7th Cir. 2008)

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(explaining that Rule 55(c) does not require a motion).

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On September 24, 2014, Plaintiff and Defendant submitted a joint stipulation and

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proposed order which states, in full, as follows: “The parties hereto, by and through their

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respective attorneys, do hereby Stipulate that the Default of Defendant Giovanni

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Holdings be set-aside and that any Default Judgment be vacated.” ECF No. 11. The

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parties’ stipulation is insufficient as it fails to set forth good cause as required by Rule

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55(c). See Mendoza, 783 F.2d at 946. Moreover, where the Clerk has already entered
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default, a request for relief from the entry of default is not saved by the fact that there is

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an Answer on file.2 See Stanley v. Heckler, 604 F. Supp. 1102, 1104 (D. Mont. 1985)

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(explaining that untimely responding to the complaint does not constitute “good cause,”

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even under the relaxed standard of Rule 55(c)); see also Cal. Practice Guide: Federal

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Civil Procedure Before Trial (The Rutter Group 2014) §§ 6:42-6:43 (noting that the entry

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of a defendant’s default cuts off his or her right to appear in the action, and, therefore,

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where a party seeks to file an answer after default has been entered, “[i]t is too late”);

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10A Wright, Miller & Kane, Federal Practice and Procedure 3d § 2692 (“Therefore, [the]

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defendant must request that the default be ‘excused’ and secure leave to answer before

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a responsive pleading will be recognized.”).3 Therefore, given that Defendant bears the

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burden of establishing good cause to set aside an entry of default, the Court DENIES

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without prejudice the parties’ request to set aside the entry of default as to Defendant

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Giovanni Holdings (ECF No. 11).

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IT IS SO ORDERED.
Dated: October 1, 2014

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In contrast, as to Cannon, the filing of an untimely Answer was sufficient to warrant the Clerk’s
denial of an entry of default because the request for default was made after the filing of Cannon’s
response. See ECF Nos. 5, 8-10; Cal. Practice Guide: Federal Civil Procedure Before Trial (The Rutter
Group 2014) §§ 6:28-29 (explaining that no default can be entered if defendant filed an untimely response
indicating its intent to defend the action prior to the entry of default).
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For the reasons set forth above, the Defendant’s untimely Answer is insufficient to warrant the
setting aside of the entry of default. However, the Court notes that the information contained within that
filing, were it included within the parties’ request, may demonstrate that Defendant has a meritorious
defense so as to constitute good cause. Compare Tri–Continental Leasing Corp. v. Zimmerman,
485 F. Supp. 495, 497–499 (N.D. Cal.1980) (holding that conclusory allegations are insufficient to set
aside default, and parties must provide adequate factual and legal bases for defenses) with McColm v.
Restoration Group, Inc., 2007 WL 738770, *2 (E.D. Cal. Mar. 7, 2007) (“Given the questions raised by
defendants in their motion to dismiss, their apparent desire to contest this action, and the policy favoring
cases to be tried on their merits, the court hereby denies plaintiff's ex parte motion for an order requiring
the Clerk to enter default.”).

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