Waryck et al v. Thor Motor Coach, Inc. et al

Filing 23

ORDER granting 12 Motion to Set Aside Default. Signed by Judge M. James Lorenz on 01/18/2023. (cxl1)

Case 3:22-cv-01096-L-MDD Document 23 Filed 01/18/23 PageID.452 Page 1 of 4

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UNITED STATES DISTRICT COURT

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SOUTHERN DISTRICT OF CALIFORNIA

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JAMES WARYCK and SANGAM
SHETH,

Case No.: 22-cv-1096-L-MDD
ORDER GRANTING MOTION TO
SET ASIDE DEFAULT

Plaintiffs,
v.

[ECF No. 12]

THOR MOTOR COACH, INC., MIKE
THOMPSON RECREATIONAL
VEHICLES, SANTA FE SPRINGS,
RELIABLE DELIVERY SERVICES,
INC., and DOES 1–20,
Defendants.

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Pending before the Court is Defendant Reliable Delivery Services, Inc.’s

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(“Reliable Delivery”) motion to set aside entry of default pursuant to Federal Rule of

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Civil Procedure 55(c). (ECF No. 12.) The motion is unopposed. (See ECF No. 22.) The

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Court decides the matter on the papers submitted and without oral argument. See Civ.

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L.R. 7.1. For the reasons stated below, the Court GRANTS the motion.

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I.

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BACKGROUND
Plaintiffs filed a complaint on July 27, 2022, asserting fives causes of action

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including a claim for professional negligence against Reliable Delivery. (ECF No. 1.)

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When Reliable Delivery failed to respond to the complaint, Plaintiffs filed a motion for

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entry of default on September 7, 2022. (ECF No. 9.) The clerk of the court entered

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default as to Reliable Delivery two days later. (ECF No. 9.) On September 20, 2022,

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Reliable Delivery filed the present motion to set aside the entry of default. (ECF No. 12.)
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II.

LEGAL STANDARD

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Federal Rule of Civil Procedure 55 provides that “[t]he court may set aside an

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entry of default for good cause.” Fed. R. Civ. P. 55(c). In assessing good cause, the

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court considers three factors: “(1) whether [the defendant] engaged in culpable conduct

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that led to the default; (2) whether [the defendant] had a meritorious defense; or (3)

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whether reopening the default judgment would prejudice [the plaintiff].” Franchise

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

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“As these factors are disjunctive, the district court [is] free to deny the motion ‘if any of

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the three factors [is] true.’” Id. (quoting Am. Ass'n of Naturopathic Physicians v.

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Hayhurst, 227 F.3d 1104, 1108 (9th Cir. 2000)). The movant bears “the burden of

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showing that any of these factors favor[s] setting aside the default.” Id.

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III.

DISCUSSION

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The Court addresses each “good cause” factor in turn.

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A.

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For purposes of Rule 55, “[a] defendant's conduct is culpable if he has received

Culpability

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actual or constructive notice of the filing of the action and intentionally failed to answer.”

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United States v. Signed Pers. Check No. 730 of Yubran S. Mesle, 615 F.3d 1085, 1092

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(9th Cir. 2010) (quoting TCI Grp. Life Ins. Plan v. Knoebber, 244 F.3d 691, 697 (9th Cir.

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2001)). But this requirement demands more than the movant “simply . . . having made a

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conscious choice not to answer.” Id. “[T]he movant must have acted with bad faith, such

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as an ‘intention to take advantage of the opposing party, interfere with judicial decision

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making, or otherwise manipulate the legal process.’” Id. (quoting TCI Grp., 244 F.3d at

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697).

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The Court finds no bad faith or culpable conduct in Reliable Delivery’s failure to

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respond to the complaint. Reliable Delivery’s counsel submitted a declaration explaining

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that he was erroneously informed that service of the complaint was effectuated August

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23, 2022, when in fact service was effectuated on July 28, 2022. (ECF No. 12-2, at 1–2.)

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Attached to the declaration is ample evidence that upon learning of the motion for entry
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of default, Reliable Delivery’s counsel acted promptly to resolve the issues with

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Plaintiffs’ counsel. (See ECF No. 12-3.) The circumstances simply do not suggest bad

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faith rather than mistake or inadvertence. Therefore, this factor favors setting aside the

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entry of default.

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B.

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“All that is necessary to satisfy the ‘meritorious defense’ requirement is to allege

Meritorious Defense

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sufficient facts that, if true, would constitute a defense.” Mesle, 615 F.3d at 1094.

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“‘[T]he question whether the factual allegation is true’ is not to be determined by the

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court when it decides the motion to set aside the default” as that question is more

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appropriately “the subject of later litigation.” Id. (quoting TCI Grp., 244 F.3d at 700).

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The Court notes that meeting the meritorious defense requirement is not an

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“extraordinarily heavy” burden. Id.

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Reliable Delivery argues that it has several meritorious defenses going to the heart

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of this case, including but not limited to, disputing the nature of any property damage to

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the subject vehicle. (ECF NO. 12-1, at 5.) Reliable Delivery also asserts that it would

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prevail on a motion to strike civil penalty and punitive damages as the claims against it

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do not suggest oppressive, fraudulent, and malicious conduct. (Id. at 5–6.) Reliable

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Delivery further alleges that this Court lacks subject matter jurisdiction and thus it would

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prevail on a motion to dismiss. (Id. at 6.)

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Reliable Delivery has sufficiently alleged facts that, if true, would constitute a

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defense. Moreover, in light of the general rule that “[c]ases should be decided upon their

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merits whenever reasonably possible,” Eitel v. McCool, 782 F.2d 1470, 1472 (9th Cir.

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1986), the Court finds that this factor weighs in favor of setting aside default.

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C.

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Setting aside an entry of default “must result in greater harm than simply delaying

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resolution of the case” to be considered prejudicial. Mesle, 615 F.3d 1095 (quoting TCI

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Grp., 244 F.3d at 701). Rather, “[t]he standard is whether [the plaintiff’s] ability to

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pursue his claim will be hindered.” Falk v. Allen, 739 F.2d 461, 463 (9th Cir. 1984).

Prejudice

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The Court finds that Plaintiffs will not be prejudiced by setting aside the entry of

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default. There is nothing to suggest that Plaintiffs’ ability to pursue their claims would be

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hindered by setting aside the entry of default, especially at this early stage of litigation

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before discovery has taken place. Accordingly, the Court finds that this factor, like the

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other factors considered, weighs in favor of setting aside default.

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IV.

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CONCLUSION
For the reasons stated above, Reliable Delivery’s motion to set aside default is

GRANTED.
IT IS SO ORDERED.

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Dated: January 18, 2023

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