Lawson v. Sutton et al
Filing
37
ORDER granting 30 Defendants' Motion to Set Aside Defaults; denying without prejudice 32 Plaintiff's construed Motion for Evidentiary Hearing. Signed by Magistrate Judge Thomas B. McCoun III on 1/4/2017. (JDE)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
TRACEE LAWSON,
Plaintiffs,
v.
Case No. 8:16-cv-403-T-17TBM
JOSEPH A. SUTTON,
JAY AT PLAY INT’L HK, LTD.,
and JAY FRANCO & SONS, INC.,
Defendants.
/
ORDER
THIS MATTER is before the Court on Defendants’ Motion to Set Aside Defaults1
(Doc. 30), pro se Plaintiff’s response in opposition (Doc. 36), and Plaintiff’s construed
Motion for Evidentiary Hearing (Doc. 32). As explained below, Defendants’ Motion is
GRANTED and Plaintiff’s Motion is DENIED without prejudice.
I.
A.
Plaintiff initiated this action for design patent and trademark infringement on
February 19, 2016. (Doc. 1). Defendants were served on May 19, 2016. (Docs. 7-9).
On June 16, 2016, the Court ordered Plaintiff to show cause why this action should
not be dismissed for lack of prosecution because Defendants had failed to respond to the
1
In support, Defendants submit the Declaration of Ezra Sutton, Esq., and Exhibits
attached thereto. (Doc. 31).
complaint and Plaintiff had not promptly moved for entry of default. (Doc. 10). Plaintiff
responded to the show cause order on June 29, 2016.2 (Doc. 11).
On July 12, 2016, counsel appeared on Defendants’ behalf and Defendants answered
the complaint. (Docs. 12-14). Plaintiff replied to Defendants’ affirmative defenses on July
22, 2016. (Doc. 15).
On July 27, 2016, Defendants moved to dismiss the complaint for lack of personal
jurisdiction or, in the alternative, to transfer venue to the Southern District of New York.
(Doc. 16). Plaintiff opposed the motion. (Docs. 17, 19-20, 25).
On August 15, 2016, the Court ordered Plaintiff to show cause on or before August
22, 2016, why her case should not be dismissed for failing to file a case management report.
(Doc. 18).
On September 16, 2016, the Court granted Defendants’ request for leave to file a
reply to Plaintiff’s response to the motion to dismiss. (Doc. 23). Defendants filed their reply
on September 28, 2016. (Doc. 24).
On November 4, 2016, the Court construed Plaintiff’s response to the order to show
cause as a motion for entry of clerk’s default and granted the construed motion. (Doc. 26).
The Court then denied as moot Defendants’ motion to dismiss the complaint / motion to
transfer venue. Id.
On November 7, 2016, a clerk’s default was entered as to each Defendant. (Docs.
27-29). The instant motions followed.
2
Plaintiff’s response contains an abbreviated statement of certain chronological events
between February 4, 2016 and June 20, 2016.
2
B.
By their Motion, Defendants concede they failed to timely respond to the complaint
and/or to timely seek an extension of time to respond to the complaint, but urge that the
failure to timely respond was not the result of willful dilatoriness or bad faith, but because
there were ongoing settlement negotiations with an oral agreement not to oppose an extension
of time if settlement was not consummated. They further acknowledge that they also failed to
formally seek an extension of time from the Court when settlement discussions broke down,
but note that they filed their Answer one day after they were formally notified by Plaintiff’s
counsel that Plaintiff had rejected the settlement offer.3 Thus, Defendants urge good cause
exists for setting aside the defaults given the settlement negotiations, their belief that Plaintiff
would not move for default under those circumstances, their meritorious defenses to this
action, and their failure to respond to the complaint in a timely manner was not willful.
Defendants further urge that Plaintiff will not be prejudiced if the defaults are set aside
because discovery has not begun and there is no scheduling order in place. (Doc. 30).
In response, Plaintiff again recounts a phone call with counsel for Defendant Sutton
who was seeking her agreement “for an extension on the default”, which she denied.4 (Doc.
3
The supporting declaration by attorney Ezra Sutton contains a time-line of
communications between counsel between March 2016 and August 2016 reflecting counsels’
efforts at settlement. (Docs. 31, 31-1).
4
As in her construed Motion, Plaintiff again contends that defense counsel
misrepresented to her that her counsel, Mr. Garcia, gave them permission for an extension.
She points out that Mr. Garcia, who has advised her throughout but is not representing her
before this Court, denied he gave such permission.
3
36). She continues to urge the Court to deny the Motion and requests the Court enter final
default judgment against all Defendants. Id.
By her construed Motion, Plaintiff complains that, contrary to Defendants’ assertion,
the attorney that assisted her in the negotiations early on (but who was not “officially”
representing her) did not give Defendants permission for an extension “on a default.” She
requests an evidentiary hearing and an order requiring defense counsel to communicate with
her in writing only. Concerning her request for a hearing, she states, “Plaintiff respectfully
request[s] that the Court grant in favor of the Plaintiff and set an evidentiary hearing to
establish the amount of damages.” (Doc. 32 at 5).
II.
Whether to set aside an entry of default is within the discretion of the trial court.
Robinson v. U.S., 734 F.2d 735, 739 (11th Cir. 1984). The court may “set aside an entry of
default for good cause.” Fed. R. Civ. P. 55(c). “Good cause” is a liberal, elastic standard that
does not have a precise formula. Compania Interamaricana Export-Import, S.A. v. Compania
Dominica De Aviacion, 88 F.3d 948, 951 (11th Cir. 1996) (citation omitted). Factors relevant
to the determination include whether the defaulted party was culpable or willful in their
conduct, whether setting aside the default would prejudice the opposing party, and whether
the defaulted party does not appear to have a meritorious defense. Id. at 951 (citation
omitted). Additional factors to consider include whether the public interest was implicated,
whether there was significant financial loss to the defaulting party, and whether the defaulting
party acted promptly to correct the default. Id.
4
The standard imposed on the defaulting party for setting aside an entry of default is
different from and less burdensome than the standard for setting aside a default judgment.
EEOC v. Mike Smith Pontiac GMC, Inc., 896 F.2d 524. 528 (11th Cir. 1990). District courts
in this circuit have required a showing that: “(1) there was excusable neglect on the part of the
defaulting party for not answering the complaint; (2) the defaulting party responded promptly
after notice of the entry of default; (3) setting aside the default will not prejudice the
non-defaulting party; and (4) the defaulting party had a meritorious defense.” Woodbury v.
Sears, Roebuck & Co., 152 F.R.D. 229, 236 (M.D. Fla. 1993).
“When it is uncertain whether good cause exists, courts generally have found it
appropriate for trial judges to exercise their discretion in favor of setting aside defaults so that
cases may be decided on their merits.” Theiss v. Giove Law Office, P.C., No. 8:08-cv-356-T17MSS, 2008 WL 2323911, at *3 (M.D. Fla. June 5, 2008) (citing William H. Danne, Jr.,
Annotation, WHAT CONSTITUTES “GOOD CAUSE” ALLOWING FEDERAL COURT TO RELIEVE
PARTY OF HIS DEFAULT UNDER RULE 55(C) OF FEDERAL RULES OF CIVIL PROCEDURE, 29
A.L.R. Fed. 7 (1976)).
III.
Upon my consideration, Defendants demonstrate adequate good cause to set aside
the clerk’s defaults entered in this case. Defendants’ conduct is fairly characterized as
excusable neglect rather than willful or culpable misconduct as evidenced by attorney
Sutton’s Declaration and, in particular, emails exchanged between counsel which clearly
5
reflect the parties’ efforts, albeit unsuccessful, at settlement.5 Plaintiff makes no claim that
such representations regarding efforts to settle the matter outside of court are inaccurate or
untrue. Nor does she counter Mr. Sutton’s understanding that during the settlement
discussions, no response to the Complaint was necessary. She does take umbrage at an
apparent misrepresentation by one defense counsel, but by my consideration this
“fabrication,” if true, does not require a different result. It simply does not detract from the
fact that negotiations were ongoing up until shortly before Defendants’ offer was rejected and
their Answer was filed and during that period counsel believed default was then off the table.
And, while Plaintiff may disagree, Defendants set forth arguably meritorious defenses.
Undoubtedly, Defendants should have better documented any agreements with
Plaintiff during the settlement discussions and otherwise sought appropriate extensions from
the Court. However, Defendants make a reasonable argument that there were ongoing good
faith efforts at settlement, during an early stage of these proceedings. They claim arguable
defenses and there is no demonstration of significant prejudice to Plaintiff should the default
5
For instance, in emails from April and May 2016, counsel for the parties continue to
discuss settling the matter “outside the courts.” (Doc. 31-1 at 9. In the May 11, 2016 email
from Plaintiff’s counsel, counsel advised defense counsel that he was still waiting to hear
from his client and he closed by stating, he wanted to “reiterate our desire to settle this outside
of litigation.” (Doc. 31-1 at 19). In a July 6, 2016 email, defense counsel advised Plaintiff
that he had received her June 30, 2016 package of documents, including an Affidavit of
Service and he provided Plaintiff with Defendants’ Answer. An Amended Answer was filed
with the Court July 12, 2016, the day following Plaintiff’s counsel’s email advising Plaintiff
had rejected the settlement offer (Id. at 26).
Moreover, Mr. Sutton avers that there were numerous telephone exchanges in May
and June 2016 also in pursuit of settlement, and he contends there was an understanding that
during this period of time, it was not necessary for Defendants to respond to the Complaint.
6
be vacated. Notably, Plaintiff does not allege specific prejudice, nor does she allege or
demonstrate willful or bad faith misconduct by Defendants.
Accordingly, Defendants’ Motion to Set Aside Defaults (Doc. 30) is GRANTED,
and the Clerk is directed to VACATE the defaults (Docs. 27-29). In light of this ruling and
because final default judgment has not been entered, Plaintiff’s construed Motion for
Evidentiary Hearing (Doc. 32) is DENIED without prejudice.
For the same reasons, it is RECOMMENDED Plaintiff’s Motion for Final Default
Judgment (Doc. 33) be DENIED as moot.
Regarding Defendants’ request that their Answer (Doc. 12) be reinstated, it does not
appear the Answer was ever stricken and thus the request is DENIED. To the extent
Defendants seek to have the motion to dismiss (Doc. 16) reinstated, that request is also
DENIED. If Defendants wish to assert any additional defenses, Defendants shall file a
motion within fourteen (14) days of the date of this Order.
Done and Ordered at Tampa, Florida, this 4th day of January 2017.
Copies furnished to:
Counsel of record
Unrepresented parties
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