Daytona Tourist Charter Corporation v. Sea Ray Boats, Inc. et al

Filing 39

ORDER granting 37 Motion to Vacate Clerk's Default. Signed by Judge Marcia G. Cooke on 7/24/2012. (tm)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
Case No. 12-20221-Civ-COOKE/TURNOFF
DAYTONA TOURIST CHARTER
CORPORATION,
Plaintiff,
v.
BROWARD SERVICES LIMITED, et al.,
Defendants.
___________________________________/
ORDER GRANTING DEFENDANT BROWARD SERVICES LIMITED’S
MOTION TO VACATE CLERK’S DEFAULT
THIS MATTER is before me upon Defendant Broward Services Limited’s (“Broward”)
Motion to Vacate the Clerk’s Entry of Default pursuant to Federal Rule of Civil Procedure 55(c)
and 60(b). (ECF No. 37). For the reasons explained in this Order, Defendant’s Motion to
Vacate the Clerk’s Entry of Default is GRANTED.
I. BACKGROUND
This is product liability action asserting several claims against the product’s
manufacturer, dealer, and/or engine manufacturer, including breach of contract, breach of
express warranties, rescission, negligent manufacturing, and strict product liability. Plaintiff
filed its Complaint on January 20, 2012 against Defendants Sea Ray Boats, Inc. (“Sea Ray”),
Broward, and Cummins, Inc.1 (ECF No. 1).
The Summons and Complaint were served upon Broward, via its registered agent, Citco
BVI Limited (“Citco”), on May 16, 2012. Aff. of Service, ECF No. 33; Def.’s Mot. to Vacate

1
 The Defendants, Sea Ray Boats, Inc. and Cummins, Inc., are not at issue in this motion for relief.

Default ¶ 4. Therefore, Broward’s answer or other responsive pleading was due on or before
June 6, 2012. On June 26, 2012, Plaintiff moved the Clerk of Court to enter default against
Broward pursuant to Federal Rule of Civil Procedure 55(a) for failure to timely respond to
Plaintiff’s Complaint or defend the case against it. (ECF No. 34). The Clerk of Court entered
such order on June 27, 2012. (ECF No. 35). On June 29, 2012, I entered an order requiring
Plaintiff to file a motion for default judgment and requiring Broward to show cause why a
motion for default judgment should not be granted. (ECF No. 36).
Broward filed the instant Motion to Vacate the Clerk’s Entry of Default on July 5, 2012
contending that Citco failed to forward the Summons and Complaint to Broward in accordance
with Citco’s “standard practice”. Def.’s Mot. to Vacate Default ¶ 10. Thus, Broward was
unaware of the service of the Complaint until it received a copy of Plaintiff’s Motion for Default
from Defendant Sea Ray on June 26, 2012. Id. ¶ 6. Because of its lack of knowledge of the suit,
Broward argues that the entry of default should be vacated because “the order was entered as a
result of mistake, inadvertence or excusable neglect on the part of Broward’s registered agent,
Citco.” See Def.’s Mot. Vacate Default at 3-4. Broward also argues that it acted immediately to
rectify the situation when it learned of the existence of the lawsuit. Further, Broward asserts that
no undue delay has occurred, no party will be prejudiced by the vacatur of the Clerk’s Default,
and it stands prepared to file its answer to the Complaint and otherwise defend against the
lawsuit. Id. at 4.
II. LEGAL STANDARD
Pursuant to Federal Rule of Civil Procedure 55(c), the Court may “set aside an entry of
default for good cause….” Fed. R. Civ. P. 55(c). “Good cause” is a mutable standard that varies
depending on the situation. See Compania Interamericana Export-Import, S.A. v. Compania

Dominicana de Aviacion, 88 F.3d 948, 951 (11th Cir. 1996) (citing Coon v. Grenier, 867 F.2d
73, 76 (1st Cir. 1989)). The standard is “a liberal one-but not so elastic as to be devoid of
substance.” Compania Interamericana Export-Import, S.A., 88 F.3d at 951. To obtain relief
under Rule 55(c), the movant must only make a “bare minimum showing” to support its claim
for relief. Jones v. Harrell, 858 F.2d 667, 669 (11th Cir.1988).
In determining whether good cause exists, courts may consider: “(a) whether the default
was culpable or willful; (b) whether setting it aside would prejudice the adversary, (c) whether
the defaulting party presents a meritorious defense; (d) whether there was significant financial
loss to the defaulting party; and (e) whether the defaulting party acted promptly to correct the
default.” S.E.C. v. Johnson, 436 F. App’x. 939, 945 (11th Cir. 2011) (internal quotations and
citations omitted). However, “[i]f a party willfully defaults by displaying either an intentional or
reckless disregard for the judicial proceedings, the court need make no other findings in denying
relief.” Id.
Plaintiff does not object to the relief sought by Broward and the resulting vacatur of the
Clerk’s Default against it. See Pl.’s Notice of Non-Objection, ECF No. 38.
III. ANALYSIS
It is my practice that if a defendant has a valid defense, the legal system is better served
allowing that defendant to present the merits of its case. Fortunately, the Eleventh Circuit
agrees. See Fla. Physician’s Ins. Co. v. Ehlers, 8 F.3d 780, 783 (11th Cir. 1993) (“We note that
defaults are seen with disfavor because of the strong policy of determining cases on their
merits.”).
Broward has demonstrated the requisite “good cause” exists to set aside the default
against it in this matter. “Good cause,” in the context of a default under Federal Rule of Civil

Procedure 55(c), is not as strict a standard as the related “excusable neglect” used to determine
whether the vacatur of a default judgment pursuant to Federal Rule of Civil Procedure 60(b) is
warranted. See, e.g., E.E.O. C. v. Mike Smith Pontiac GMC, Inc., 896 F.2d 524, 528 (11th
Cir.1990); Anheuser Busch, Inc. v. Philpot, 317 F.3d 1264 (2003). Whereas I have previously
determined that the failure to establish “minimal procedural safeguards” to ensure the receipt of
civil actions does not constitute excusable neglect to vacate a default judgment, see Hensel
Phelps Const. Co. v. Drywall Systems Inc. of South Florida, No. 06-21755-CIV, 2007 WL
2433839, at *2-3 (S.D. Fla. Aug. 22, 2007) (relying upon Gibbs v. Air Canada, 810 F.2d 1529
(11th Cir.1987)), prior to final judgment being entered, good faith reliance on one’s registered
agent may be sufficient, along with other factors weighed herein, to satisfy the requisite “good
cause” to set aside the entry of a clerk’s default. The default in this instance was neither culpable
nor willful, but a rudimentary, and at times, costly mistake. To award Plaintiff a default would
unfairly prevent the case from being decided on the merits, which is contrary to the policy in this
circuit.
Further, all other factors weigh in favor of vacating the default against Broward. First
and foremost, it is uncontested that no party would suffer any prejudice by setting aside the
default. Second, Broward has prepared its answer and affirmative defenses to Plaintiff’s
Complaint demonstrating that it is prepared to mount a meritorious defense, which overcomes
the imposition of default judgment. Third, if Plaintiff were to seek a default judgment in the full
amount of the vessel at issue, it could arguably constitute a significant financial loss to the
defaulting party. Lastly, Broward acted swiftly to address the default. The same day that
Broward was informed by Defendant Sea Ray of the pending lawsuit, Broward began
investigating whether service was perfected upon it. Def.’s Mot. to Vacate Default ¶ 5-6.

Within two days of learning of the Motion for Clerks’ Entry of Default, Broward secured legal
counsel to defend against the suit. Id. ¶ 8. Within one week of retaining counsel, Broward filed
its Motion to Vacate the Clerk’s Entry of Default with its proposed Answer and Affirmative
Defendants to the Complaint. Broward has demonstrated that it responded relatively swiftly to
address the default.
IV. CONCLUSION
Accordingly, Defendant Broward Services Limited’s Motion to Vacate the Clerk’s
Default (ECF No. 37) is GRANTED. It is ORDERED and ADJUDGED that the Clerk’s
Default entered against Defendant Broward Services Limited is VACATED. Broward Services
Limited shall file its answer or responsive pleading to Plaintiff’s Complaint within seven (7)
days of the date of this order.
DONE and ORDERED in chambers at Miami, Florida, this 24TH day of July 2012.

Copies furnished to:
William C. Turnoff, U.S. Magistrate Judge
Counsel of record