LUNA v. RAMBO

Filing 25

ORDER GRANTING 16 Motion to Set Aside Default; and DENYING 16 Motion to Dismiss. Signed by Judge James E. Boasberg on 4/14/2011. (lcjeb2)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA

RICHARD LUNA,
Plaintiff,
v.

Civil Action No. 09-02331 (JEB)

RONALD RAMBO,
Defendant.

ORDER
Plaintiff Richard Luna hired SCS and Defendant Ronald Rambo to perform construction
work on his house. A dispute as to the terms of the contract, the quality of the work performed,
and the licensing status of the contractors arose, leading to this lawsuit. Defendant failed to
respond to the complaint within the required amount of time, and default was therefore entered
by the Clerk in January 2010. Defendant has now filed the instant Motion to Set Aside Entry of
Default and to Dismiss on the grounds that service was not properly effectuated and that
litigation is precluded by a prior settlement agreement between the parties.
The Court has reviewed Defendant’s Motion, Plaintiff’s Opposition thereto, and
Defendant’s Reply.
I.

Factual and Procedural Background
The Complaint sets out that Plaintiff hired a company called SCS in December 2006 to

perform extensive renovations on his home. Work began on January 19, 2007, but a dispute
arose soon thereafter, and the project was halted on March 16, 2007. During that time, Plaintiff
claims to have made payments to Defendant, who was the project manager and supervised the
work performed in the home, and Defendant’s associates in the amount of $108,500. In

addition, Plaintiff also seeks compensation for the $203,162.79 he has allegedly spent to return
his home to a habitable condition after the contract was breached.
Plaintiff filed the Complaint in this Court against Defendant on December 8, 2009. He
notified the Court that Defendant had been served on December 21, 2009, and he filed for an
entry of default when Defendant failed to respond. The Clerk entered default as to Defendant on
January 13, 2010. On November 17, 2010, Judge Kennedy, to whom this case was previously
assigned, issued an Order to Show Cause as to why the Complaint should not be dismissed
without prejudice for failure to prosecute. Plaintiff then filed a Motion for Default Judgment on
December 3, 2010, which precipitated Defendant’s instant Motion.
In his Opposition, Defendant alludes to further history not set out in Plaintiff’s complaint.
According to Defendant, Plaintiff brought suit in the Superior Court of the District of Columbia
against SCS Contracting Group, LP; SCS Contracting Group; Christopher Petito, a
representative of SCS; and Stephen C. Sieber, the President and CEO of SCS, on April 11, 2007.
Meanwhile, in November 2007, Sieber filed for protection under Chapter 11 of the Bankruptcy
Code in Maryland. Defendant further states that the Superior Court litigation was ultimately
resolved in October 2009, when the parties entered into a settlement agreement.
II.

Legal Standard
Under the Federal Rules of Civil Procedure, “the court may set aside an entry of default

for good cause.” Fed. R. Civil. P. 55(c).
Rule 12(b)(6) provides for the dismissal of an action where a complaint fails “to state a
claim upon which relief can be granted.” When the sufficiency of a complaint is challenged
under Rule 12(b)(6), the factual allegations presented in it must be presumed true and should be
liberally construed in plaintiff’s favor. Leatherman v. Tarrant Cty. Narcotics & Coordination

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Unit, 507 U.S. 163, 164 (1993). The notice pleading rules are “not meant to impose a great
burden on a plaintiff,” Dura Pharm., Inc. v. Broudo, 544 U.S. 336, 347 (2005), and he or she
must thus be given every favorable inference that may be drawn from the allegations of fact.
Twombly, 550 U.S. at 584. Although "detailed factual allegations" are not necessary to
withstand a Rule 12(b)(6) motion, Twombly, 550 U.S. at 555, “a complaint must contain
sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face."
Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) ((internal quotation omitted). Plaintiff must put
forth “factual content that allows the court to draw the reasonable inference that the defendant is
liable for the misconduct alleged." Iqbal, 129 S. Ct. at 1949. Though a plaintiff may survive a
12(b)(6) motion even if “recovery is very remote and unlikely,” Twombly, 550 U.S. at 555
(citing Scheuer v. Rhodes, 416 U.S. 232, 236 (1974), the facts alleged in the complaint “must be
enough to raise a right to relief above the speculative level.” Id. at 555.
Rule 12(d) reads: “If on a motion under Rule 12(b)(6) . . . matters outside the pleadings
are presented to and not excluded by the court, the motion must be treated as one for summary
judgment under Rule 56. All parties must be given a reasonable opportunity to present all the
material that is pertinent to the motion.”
III.

Analysis
A. Motion to Set Aside Default
In deciding whether “good cause” has been shown to merit setting aside an entry of

default, courts must consider “whether (1) the default was willful, (2) a set-aside would prejudice
plaintiff, and (3) the alleged defense was meritorious.” Keegel v. Key West & Caribbean
Trading Co., Inc., 627 F.2d 372, 373 (D.C. Cir. 1980).

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The first factor to consider is whether the default was willful. Defendant claims that his
default was not willful in this case because he was not properly served and thus was not on
notice of the instant litigation. Both parties spend considerable time discussing the particulars of
313 and 315 J.W. Williams Road and why service was or was not effected. The Court’s best
determination is that, while service ultimately may have been effected, Defendant certainly
presents valid arguments in favor of his position. Being mindful that “strong policies favor
resolution of disputes on their merits” rather than by default, Jackson v. Beech, 636 F.2d 831,
836 (D.C. Cir. 1980), the Court cannot find that Defendant willfully defaulted by failing to
answer a complaint that arguably was not properly served on him.
Plaintiff’s arguments as to prejudice are weak, especially given that his Motion for
Default Judgment was filed almost a year after the clerk’s entry of default and only after Judge
Kennedy issued an Order to Show Cause. The prejudice to which he alludes, based on the length
of time that has passed since the filing of his complaint, is thus as much attributable to his own
failure to prosecute as it is to Defendant’s failure to respond. This factor thus also counsels
setting aside the default.
Finally, the Court must decide whether Defendant has put forth any defense meritorious
enough to justify a trial on the merits rather than a decision by default judgment. In this analysis,
“[l]ikelihood of success is not the measure. [Instead,] Defendants' allegations are meritorious if
they contain even a hint of a suggestion which, proven at trial, would constitute a complete
defense.” Keegel, 627 F.2d at 374 (internal quotations and citations omitted). Defendant has
articulated potentially meritorious defenses, such as the applicability of the prior settlement in
this case, which could certainly constitute a bar to any recovery for Plaintiff if proven at trial.

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As all three factors thus favor Defendant, the Court is convinced that good cause has been
shown and the default should be set aside.
B. Motion to Dismiss
Defendant seeks more than the vacating of default; he also asks the Court to dismiss the
complaint. In so moving, he relies on the alleged applicability of the prior settlement agreement
signed by Plaintiff and Defendant’s employer, SCS. This agreement, however, did not figure in
Plaintiff’s Complaint. In fact, no mention of the earlier Superior Court suit was made in the
Complaint. Under the Federal Rules of Civil Procedure, when a Court is presented with
materials outside the pleadings in a Rule 12(b)(6) motion, it may either exclude this extrinsic
evidence or convert the motion to one for Summary Judgment under Rule 56. Fed. R. Civ. P.
12(d); see, e.g., Benoit v. U.S. Dept. of Agriculture, 577 F.Supp.2d 12, 22 -23 (D.D.C. 2008). In
this case, the Court cannot entertain Defendant’s arguments regarding the settlement agreement
because Plaintiff has not been “given a reasonable opportunity to present all the material that is
pertinent to the motion.” Rule 12(d). The Court is thus unwilling to convert this Motion into one
for summary judgment.
The Court, therefore, ORDERS that:
1. The Motion to Set Aside Default is GRANTED;
2. The Motion to Dismiss is DENIED; and
3. Defendant shall answer by May 5, 2011.
SO ORDERED.
/s/ James E. Boasberg
JAMES E. BOASBERG
United States District Judge
Date:

April 14, 2011

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