Old Republic National Title Insurance Co. v. South Lakeland Airport, Inc.
Filing
20
ORDER denying 17 Motion to set aside default. See Order for details. Signed by Judge Virginia M. Hernandez Covington on 8/9/2011. (KAK)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
OLD REPUBLIC NATIONAL TITLE
INSURANCE COMPANY,
Plaintiff,
v.
Case No.
8:10-cv-2613-T-33AEP
SOUTH LAKELAND AIRPORT, INC.,
Defendant.
_______________________________/
ORDER
This matter comes before the Court pursuant to South
Lakeland Airport’s Motion to Set Aside Default (Doc. # 17) as
well
as
South
Lakeland
Airport’s
Answer
and
Affirmative
Defenses (Doc. # 18), each filed on July 12, 2011.
Old
Republic National Title Insurance Company filed a Memorandum
in Opposition to the Motion (Doc. # 19) on July 22, 2011.
After due consideration, the Court denies the Motion.
I.
Procedural History
Old Republic, a Minnesota title insurance company, filed
this insurance action seeking declaratory relief against South
Lakeland Airport on November 19, 2010.
(Doc.
# 1).
Old
Republic alleged in the complaint that South Lakeland Airport,
a Florida corporation, filed a title insurance claim with Old
Republic
that
was
subject
to
exclusion
pursuant
applicable title insurance policy. Id. at ¶ 14.
to
the
Old Republic
sought an order declaring that Old Republic had no obligation
to defend or indemnify South Lakeland Airport with respect to
a State court lawsuit filed against South Lakeland Airport.
Old Republic also requested an order finding its denial of
South
Lakeland
Airport’s
title
claim
to
be
just
and
appropriate under the terms of the applicable title insurance
policy and granting Old Republic its attorney’s fees and
costs.
On December 15, 2010, Old Republic filed return of
service documents showing that it served the summons and
complaint on South Lakeland Airport through South Lakeland
Airport’s registered agent.
(Doc. # 5).
South Lakeland
Airport failed to respond to the complaint, and Old Republic
filed a motion for entry of Clerk’s default on January 11,
2011.
(Doc. # 8).
The Clerk appropriately entered a default
against South Lakeland Airport on January 12, 2011, pursuant
to Federal Rule of Civil Procedure 55(a).
(Doc. # 9).
Thereafter, on January 18, 2011, Old Republic filed a motion
for default judgment against South Lakeland Airport. (Doc. #
10).
On January 25, 2011, Jayson O. Myers, Esq. filed a notice
of appearance on behalf of South Lakeland Airport (Doc. # 11)
and a motion for an extension of time to respond to the motion
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for default judgment (Doc. # 12).
On January 26, 2011, the
Court entered an Order granting the requested extension of
time,
giving
South
Lakeland
Airport
until
and
including
February 8, 2011, to respond to the motion for default
judgment. (Doc. # 13). Notwithstanding the Court’s extension
of time, South Lakeland Airport did not file a timely response
to the motion for default judgment.
Accordingly, on February 15, 2011, this Court granted Old
Republic’s motion for default judgment.
(Doc. # 14).
The
Clerk entered a Default Judgment (Doc. # 15) against South
Lakeland Airport on February, 15, 2011, and thereafter closed
the case. Copies of the February, 15, 2011, Order and Default
Judgment were submitted to South Lakeland Airport’s counsel,
Jayson O. Myers, Esq. by the Clerk on February, 15, 2011.
Nearly
five
months
later,
on
July
12,
2011,
South
Lakeland Airport filed the present Motion to Set Aside Entry
of Default, which is ripe for the Court’s review.
II.
Legal Standard
Pursuant to Federal Rule of Civil Procedure 55(c), “The
court may set aside an entry of default for good cause, and it
may set aside default judgment under Rule 60(b).”
Since a
default judgment has been entered against South Lakeland
Airport, the more stringent standard set forth in Rule 60(b)
3
applies.
Rule 60(b)(1), Fed.R.Civ.P., allows the Court to
relieve a party from a final judgment due to “mistake,
inadvertence, surprise, or excusable neglect” by the moving
party.
To establish mistake, inadvertence, or excusable
neglect under Rule 60(b)(1), a defaulting party must show
that: “(1) it had a meritorious defense that might have
affected the outcome; (2) granting the motion would not result
in prejudice to the non-defaulting party; and (3) a good
reason existed for failing to reply to the complaint.” In re
Worldwide Web Systems, Inc., 328 F.3d 1291, 1295 (11th Cir.
2003)(internal quotation and citation omitted).
III. Analysis
A.
No Meritorious Defense
South Lakeland Airport contends that it has a meritorious
defense because “the underlying lawsuit giving rise to the
title claim that is the subject matter of this case, does not
fall under the policy exceptions found in the title policy at
issue.” (Doc. # 17 at 7).
South Lakeland Airport further
remarks that “these exceptions are carefully worded and are
extremely specific as to various property rights pertaining to
specific parcels of land.” Id.
In its proposed affirmative
defenses, South Lakeland Airport tends to argue that “property
transferred
by
Quit-Claim
Deed[,]
4
such
as
the
property
disputed in the Lawsuit” is not covered by the relevant policy
exceptions. (Doc. # 18 at 5).
Old Republic counters that South Lakeland Airport’s
proffered meritorious defense is deficient and factually
unsupportable as follows:
[South Lakeland Airport] makes a blanket, factually
unsubstantiated
statement
that
the
Policy
exceptions somehow do not apply to property
transferred by quit-claim deed. That is its only
proposed defense. [Old Republic] knows of no facts
or laws that support such a reading nor has [South
Lakeland Airport] provided any to this Court. A
quit-claim deed transfers property rights without
limitation.
The only difference between a quitclaim deed and a warranty deed, for example, is
that the grantor is not warranting the rights
transferred. Quit-claim deeds in no way limit the
ability of a grantor to transfer easement rights.
See e.g., 19 Fla. Jur. 2d Deeds § 156, “A quitclaim
deed, unless a contrary intent appears, passes all
the right, title, and interest which the grantor
has at the time of making the deed, which is
capable of being transferred by deed, and nothing
more.”
(Doc. # 19 at 7).
Although South Lakeland Airport has supplied the Court
with excerpts from the applicable insurance policy, copies of
various quit-claim deeds, items of correspondence, and the
declaration of its Vice President Theresalynne Kurtz, the
Court determines that South Lakeland Airport has failed to
provide the Court with the indicia of a meritorious defense.
5
As explained in Solaroll Shade & Shutter Corp. v. BioEnergy Sys., Inc., 803 F.2d 1130, 1133 (11th Cir. 1986), the
moving party “must make an affirmative showing of a defense
that is likely to be successful.”
The moving party must
establish a meritorious defense “by a clear and definite
recitation of the facts.” Gibbs v. Air Canada, 810 F.2d 1529,
1538 (11th Cir. 1987).
The
Court
agrees
with
Old
Republic
that
“[t]he
affirmative defenses raised by [South Lakeland Airport] are
simply
conclusory
statements
unsupported
by
plausible
allegations of fact. [South Lakeland Airport] has not offered
any facts or arguments to explain how its defenses are likely
to succeed.” (Doc. # 19 at 8).
The Court finds that South Lakeland Airport has failed to
present a meritorious defense and, therefore, the Court would
be justified in ending its analysis here.
However, in an
effort to fully address each issue presented, the Court will
continue its analysis to address whether granting the Motion
would
prejudice
Old
Republic
and
whether
South
Lakeland
Airport has provided a good reason for failing to respond to
the complaint.
B.
Prejudice to Old Republic
"To establish mistake, inadvertence, or excusable neglect
6
under Rule 60(b)(1), a defaulting party must [also] show that
. . . granting the motion would not result in prejudice to the
non-defaulting party.”
In re Worldwide Web Sys., Inc., 328
F.3d at 1295. Without any supporting case law, South Lakeland
Airport
argues
prejudice
if
that
this
Old
Court
Republic
were
to
would
set
not
aside
suffer
the
any
default
judgment.
In contrast, Old Republic contends that it would suffer
significant prejudice if this Court were to set aside the
default judgment in light of the nearly five-month delay
between the entry of default judgment and the filing of
present Motion.
See Sloss Indus. Corp. v. Eurisol, 488 F.3d
922, 935 (11th Cir. 2007)(finding prejudice where defendant
did not move to set aside default judgment until “over three
and a half months after it was served with process, and over
one month after the default judgment was entered”).
Due to
the substantial delay between the entry of default judgment
and the instant Motion, the Court finds that Old Republic
would experience prejudice if the default judgment were set
aside.
C.
No Good Reason for Failure to Respond to Complaint
Finally, in order to establish mistake, inadvertence, or
excusable neglect, the defaulting party must prove that a good
7
reason existed for its failure to respond to the complaint.
In re Worldwide Web Sys., Inc., 328 F.3d at 1295.
South
Lakeland Airport’s arguments concerning whether its failure to
respond to the complaint should be excused are unavailing.
South Lakeland Airport attributes its failure to respond to
the complaint to a lack of adequate legal representation.
South Lakeland Airport submits that it “is a victim of its own
legal ineptitude and limited financial resources.” (Doc. # 17
at 4).
The Court is wholly unpersuaded by South Lakeland
Airport’s arguments.
A close reading of South Lakeland Airport’s arguments
shows
that
it
did
not
take
advantage
of
the
ample
opportunities it had to defend against this action.
South
Lakeland Airport asserts in its Motion that it assumed that
its usual counsel, R. Patrick Phillips, Esq., would file a
response to the complaint. (Doc. # 17 at 4).
However, “Mr.
Phillips informed Defendant, first by phone, then by letter,
that he would be unable to represent it in this matter.” Id.
South
Lakeland
Airport
searched
for
another
attorney
to
represent it, and “it was not until January 25, 2011, that
Defendant’s current representation was finally engaged.
It
was around that time that Defendant became aware of the entry
of default.” Id.
8
The record reflects that on January 25, 2011, Attorney
Myers entered an appearance on behalf of South Lakeland
Airport and filed a motion for an extension of time to respond
to the motion for default judgment.
(Doc. ## 11, 12).
The
Court granted the extension motion; however, Attorney Myers
failed to respond to the motion for default judgment.
There
is no reason set forth in the present Motion explaining why
Attorney Myers failed to respond to the motion for default
judgment prior to the Court granting default judgment and the
Clerk’s corresponding entry of default judgment.
To the extent that South Lakeland Airport blames its
current predicament on its chosen counsel, the Court find such
argument fruitless. As stated in Link v. Wabash Railroad Co.,
370 U.S. 626, 633-34 (1962):
[Defendant] voluntarily chose this attorney as his
representative in the action, and he cannot now
avoid the consequences of the acts or omissions of
this freely selected agent. Any other notion would
be wholly inconsistent with our system of
representative litigation, in which each party is
deemed bound by the acts of his lawyer-agent and is
considered to have notice of all facts, notice of
which can be charged upon the attorney.
Id.
Here, South Lakeland Airport has failed to demonstrate
any facts upon which the Court could find excusable neglect.
As held in Gibbs, 810 F.2d at 1537, “Default that is caused by
the
movant’s
failure
to
establish
9
minimum
procedural
safeguards for determining that action in response to a
summons and complaint is being taken does not constitute
default through excusable neglect.”
In addition, South Lakeland Airport’s remark that it did
not act in bad faith or willfully does not change the course
of the Court’s analysis.
As aptly stated by the court in
Weingarten v. Campagna, 178 B.R. 283, 285 (Bankr. M.D. Fla.
1995), “the Eleventh Circuit does not require culpable or
willful conduct on the part of the defendant to deny a motion
to set aside default.”
Rather, “where a party offers no good
reason for the late filing of an answer, entry of default is
appropriate and it would be an abuse of discretion to set
aside a default judgment where no good reason has been offered
for the default.” Id.
Case
law
is
clear
that
South
Lakeland
Airport
presumptively received all of the documents in this case,
including the summons and the complaint, the motion for
Clerk’s default, entry of the Clerk’s default, the extension
motion, the Court’s order granting the finite extension, and
the motion for default judgment.
Konst v. Fla. E. Coast R.R.
Co., 71 F.3d 851, 851-855 (11th Cir. 1996) (noting “[t]he
common law has long recognized a rebuttable presumption that
an item properly mailed was received by the addressee,” and
10
“[t]here is a presumption that officers of the government
perform their duties”); Barnett v. Okeechobee Hosp., 283 F. 3d
1232, 1239-42 (11th Cir. 2002) (holding that the defendant
presumptively received a document mailed to it).
South
Lakeland Airport failed to provide an explanation for why its
counsel did not respond to the motion for default judgment.
Thus, the Court determines that South Lakeland Airport
has
failed
to
satisfy
the
final
factor–-“good
reason”–-
required to establish mistake, inadvertence, or excusable
neglect under Rule 60(b)(1).
In re Worldwide Web Sys., Inc.,
328 F.3d at 1295.
IV.
Conclusion
The Court recognizes that “there is a strong policy of
determining cases on their merits.” Sloss, 488 F.3d at 934.
However, this Court must also consider the interests of
finality as well as practical concerns.
As stated in African
Methodist Episcopal Church, Inc. v. Ward, 185 F.3d 1201, 1203
(11th Cir. 1999):
[I]nherent in the adversary system of justice is
the idea that each side ought to be heard prior to
a court’s entry of final judgment. However, that
same system requires that the court have the power
to compel parties to appear before it. The threat
of default (and default judgment) is the court’s
primary means of compelling defendants in civil
cases to appear before the court. If these defaults
could be put aside without cause, the threat of
default would be meaningless, and courts would lose
11
much of their power to compel participation by
civil defendants.
Id.
Further, as indicated in Sloss, “time matters when one
seeks to set aside a default” and the “longer
a
defendant
. . . delays in responding to a complaint, the more compelling
the reason it must provide for its inaction when it seeks to
set aside a default judgment.” 488 F.3d at 935.
Here, South
Lakeland Airport failed to provide a compelling reason for its
failure to timely respond to the complaint, and the present
Motion was filed nearly five months after the entry of the
Court’s final judgement. Under the facts presented, the Court
denies the Motion.
Accordingly, it is hereby
ORDERED, ADJUDGED, and DECREED:
South Lakeland Airport’s Motion to Set Aside Entry of
Default (Doc. # 17) is DENIED.
DONE and ORDERED in Chambers, in Tampa, Florida, this 9th
day of August, 2011.
Copies: Counsel and Parties of Record
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