Joe Hand Promotions, Inc. v. Angulo et al

Filing 29

ORDER by Judge Hamilton Granting 26 Motion to Set Aside Default (pjhlc2, COURT STAFF) (Filed on 11/4/2011)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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JOE HAND PROMOTIONS,
Plaintiff,

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v.

ORDER GRANTING MOTION
TO SET ASIDE DEFAULT

EFRAIN FONSECA ANGULO, et al.,

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For the Northern District of California

United States District Court

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No. C 10-5578 PJH

Defendants.
_______________________________/

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Before the court is the defendant Francisco Montecino’s motion for an order setting

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aside the default entered in the above-entitled action on April 14, 2011. Having read the

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parties' papers and carefully considered their arguments, and good cause appearing, the

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court hereby GRANTS defendant’s motion to set aside the default.

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Pursuant to Federal Rule of Civil Procedure 55(c), a court may set aside entry of

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default for good cause. The Ninth Circuit utilizes a three-factor test to determine whether

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good cause exists. See United States v. Mesle, 615 F.3d 1085, 1091 (9th Cir. 2010)(‘good

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cause’ determination requires consideration of three factors: (1) whether defendant

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engaged in culpable conduct; (2) whether defendant has no meritorious defense; or (3)

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whether opposing party will suffer prejudice). Pursuant to Mesle, ”a finding that any one of

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these factors is true is sufficient reason for the district court to refuse to set aside the

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default." Id. As the party seeking relief from the entry of default, defendant here bears the

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burden of showing that the three Mesle factors favor such relief. See Franchise Holding II,

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LLC. v. Huntington Restaurants Grp., Inc., 375 F.3d 922, 926 (9th Cir. 2004).

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With respect to the first Mesle factor, the court concludes that defendant has not
engaged in culpable conduct. A defendant's conduct is culpable “if he has received actual

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or constructive notice of the filing of the action and intentionally failed to answer." Mesle,

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615 F.3d at 1092; see also TCI Group Life Ins. Plan v. Knoebber, 244 F.3d 691, 697 (9th

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Cir. 2001)(culpability requires the defendant to have "acted with bad faith, such as an

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'intention to take advantage of the opposing party, interfere with judicial decision-making, or

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otherwise manipulate the legal process"). Here, defendant filed a motion to dismiss the

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complaint on April 15, 2011 – one day after the clerk entered default, and only days past

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the deadline for responding to plaintiff’s initial complaint. Furthermore, defendant is

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unrepresented, a fact that warrants added consideration. See Mesle, 615 F.3d at 1093

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(declining to attribute intentionality to an unrepresented defendant's mere failure to answer
a complaint, holding that such a stringent culpability standard was reserved for a "legally

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For the Northern District of California

United States District Court

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sophisticated entity or individual" who is presumed to have "an understanding of the

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consequences of its actions"). In view of these facts, the court concludes that defendant

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has not intentionally failed to answer or respond to the complaint. Therefore, defendant

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has not engaged in culpable conduct under Mesle.

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Nor is defendant devoid of a potentially meritorious defense. To satisfy the

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meritorious defense requirement, "[a] defendant seeking to vacate a default judgment must

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present specific facts that would constitute a defense." See Mesle, 615 F.3d at 1094.

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However, the burden to show a meritorious defense in support of a motion to set aside "is

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not extraordinarily heavy." Id. Defendant need only "allege sufficient facts that, if true,

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would constitute a defense...”. Id. Furthermore, the meritorious defense requirement is

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also more liberally applied on a Rule 55(c) motion to set aside entry of default

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than on a Rule 60(b) motion to set aside default judgment. See id. at 1091 n.1. Here,

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defendant’s motion to set aside the default challenges the complaint on the ground that

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defendants never actually engaged in the unauthorized and/or unlawful display of the

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alleged programming in question. See, e.g., Mot. Set Aside Def. at 2. Liberally construed,

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defendant's motion challenges the allegations of the complaint on its merits, for failure to

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state a claim. Thus, defendant has presented a legally cognizable defense.

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Finally, there is no prejudice to plaintiff that results from setting aside the default.

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"To be prejudicial, the setting aside of a judgment must result in greater harm than simply

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delaying resolution of the case. Rather, 'the standard is whether plaintiff's ability to pursue

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his claim will be hindered.'" TCI Group, 244 F.3d at 701 (citation and quotation marks

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omitted). Here, defendant delayed only a matter of days in responding to the complaint

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after she was served. Thus, setting aside the default would not result in "tangible harm

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such as loss of evidence, increased difficulties of discovery, or greater opportunity for

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fraud or collusion." Id. Moreover, particularly – as here – where default judgment has not

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been entered, the lack of prejudice to plaintiff favors granting the motion to set aside entry
of default.

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For the Northern District of California

United States District Court

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In sum, therefore, the three factors in the good cause analysis under Mesle favor

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setting aside the entry of default pursuant to Rule 55(c). This conclusion is furthermore

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consistent with the strong public policy that generally disfavors default judgments in favor of

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resolving a case on its merits. See Pena v. Seguros La Comercial, S.A., 770 F.2d 811, 814

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(9th Cir. 1985). Accordingly, defendant's motion to set aside the default against him is

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GRANTED.

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Defendant’s motion to dismiss, which has already been filed, is therefore placed

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back on calendar. Plaintiff's opposition, the court notes, was filed on June 7, 2011. If

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defendant wishes to file a reply to the opposition, he must do so by November 18, 2011.

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The court will thereafter decide the motion on the papers. No hearing will be held.

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Default as to the remaining defendants – defendants Efrain Fonseca Angulo and

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Idalia Matilde Montecinos – remains valid, as neither of these defendants has joined in the

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instant motion to set aside the default. Accordingly, plaintiff’s motion for default judgment

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may go forward as to these two defendants. Plaintiff is welcome to file a renewed motion

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for default judgment limited to these two defendants, no later than November 18, 2011.

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Such action will have the event of terminating the motion for default judgment presently on

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file. However, in the event no renewed motion is filed by November 18, the court will by

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separate order refer the pending motion for default judgment to a magistrate judge for a

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report and recommendation with respect to the aforementioned two defendants only.

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IT IS SO ORDERED.

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Dated: November 4, 2011
______________________________
PHYLLIS J. HAMILTON
United States District Judge

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For the Northern District of California

United States District Court

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