United States of America v. Kerr

Filing 17

MEMORANDUM Opinion and Order Signed by the Honorable Sheila Finnegan on 10/7/2015: Defendant's Motion to Vacate Default Judgment of July 10, 2015 11 is denied. [For further details see memorandum opinion and order.] Mailed notice. (is, )

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
UNITED STATES OF AMERICA,
Plaintiff,
v.
BERISFORD B. KERR a/k/a KERR
BERISFORD,
Defendant.

)
)
)
)
)
)
)
)
)
)

No. 15 C 503
Judge Sheila Finnegan

MEMORANDUM OPINION AND ORDER
In August 1992, Berisford B. Kerr a/k/a Kerr Berisford (“Defendant”) obtained a
student loan in the amount of $12,170.11 pursuant to the Federal Family Education
Loan Program. The loan was guaranteed by the Iowa College Aid Commission, and
reinsured by the U.S. Department of Education under loan guaranty programs
authorized by Title IV-B of the Higher Education Act of 1965, as amended, 20 U.S.C. §§
1071 et seq.

Defendant defaulted on the loan on June 4, 1998, and subsequent

attempts to collect the debt from him were unsuccessful.1 The United States has now
filed suit to recover the outstanding principal amount of $18,662.13, plus interest
accruing at the contract rate of 9% per year.
On March 19, 2015, Defendant, proceeding pro se, requested an extension of
time to answer the complaint “to seek counsel regarding this matter.” (Doc. 5). This
Court granted the motion and gave Defendant until May 27, 2015 to file his answer;
Defendant failed to do so or to seek a further extension. (Doc. 6). Plaintiff waited
almost six weeks, until July 9, 2015, to move for entry of a default judgment against
1

Defendant stated in open court that he believed he made two payments on the loan, but
Plaintiff’s records show no payments. (Doc. 1-2).

Defendant in the amount of $43,946.24, including: $18,662.13 in principal; $25,219.11
in prejudgment interest to September 10, 2013, at 9% annually; and $65 in agency
costs. (Doc. 9 ¶ 6). This Court entered the default judgment against Defendant on July
10, 2015. (Doc. 10).
A little less than a month later, on August 7, 2015, Defendant filed a motion to
vacate the default judgment, stating that he “was unable to respond to answer [sic] due
to family matter of death, and going out of state.” (Doc. 11). During motion hearings
before this Court on August 13, August 27, and October 7, 2015, Defendant further
explained that the deadline “slipped past” him because his father died on May 27, 2015,
his daughter’s godmother died on May 31, 2015, and he was in California from late May
to mid-June looking after his mother. Defendant also noted that he had knee surgery
sometime in May 2015 followed by rehabilitation, and was searching for an attorney.
Plaintiff opposes the motion, arguing that Defendant cannot meet the standard for
vacating a default judgment under Federal Rule of Civil Procedure 60(b). Plaintiff also
posits that it may be in Defendant’s best interest to keep the judgment in order to take
advantage of the lower interest rate it provides.2
The Court has considered all the arguments and now holds that Defendant has
not met the requirements for vacating the default judgment. His motion is therefore
denied.

2

Prior to entry of judgment, interest on the loan accrues at the contract rate of 9%. Postjudgment interest, on the other hand, is “calculated from the date of the entry of the judgment, at
a rate equal to the weekly average 1-year constant maturity Treasury yield, as published by the
Board of Governors of the Federal Reserve System, for the calendar week preceding[] the date
of the judgment.” 28 U.S.C. § 1961(a). According to Plaintiff’s counsel, that statutory postjudgment interest rate for the calendar week preceding the date of judgment was less than 1%.

2

DISCUSSION
A.

Standard of Review

Rule 55(c) allows a court to “set aside a default judgment under Rule 60(b).”
FED. R. CIV. P. 55(c). Rule 60(b) provides that “[o]n motion and just terms, the court
may relieve a party . . . from a final judgment [due to] (1) mistake, inadvertence,
surprise, or excusable neglect.”

FED. R. CIV. P. 60(b).

Excusable neglect

“encompasses ‘all relevant circumstances surrounding the party’s omission,’” including
such factors as “the reason for the default, whether it was within the movant’s control,
the danger of prejudice to the non-movant, and the interests of judicial administration.”
Tygris Asset Finance, Inc. v. Szollas, No. 09 C 4488, 2010 WL 2610652, at *1 (N.D. Ill.
June 21, 2010) (quoting Casio Comp. Co. v. Noren, 35 Fed. Appx. 247, 250 (7th Cir.
2002)). See also Pioneer Inv. Servs. Co. v. Brunswick Assocs. Ltd. Partnership, 507
U.S. 380, 389 (1993). Despite this “flexible understanding,” however, “‘[i]nadvertence,
ignorance of the rules, or mistakes construing the rules’ are not ordinarily recognized as
forms of excusable neglect,’” and “negligent handling of a case, by itself, will not excuse
untimely behavior or satisfy the showing required by Rule 60(b).” Casio Comp. Co., 35
Fed. Appx. at 250 (citing Pioneer, 507 U.S. at 391-92 and Norgaard v. DePuy
Orthopaedics, Inc., 121 F.3d 1074, 1075 (7th Cir. 1997)). The rule instead “establishes
a high hurdle for parties seeking to avoid default judgments,” Jones v. Phipps, 39 F.3d
158, 162 (7th Cir. 1994), and relief is proper only in “exceptional circumstances.”
Swaim v. Moltan Co., 73 F.3d 711, 722 (7th Cir. 1996).
To set aside a default judgment, “a specialized three-part standard has evolved
which squarely places the burden on the moving party to show: (1) ‘good cause’ for the

3

default; (2) quick action to correct the default; and (3) the existence of a meritorious
defense to the original complaint.”

Jones, 39 F.3d at 162; Yash Techs., Inc. v.

Prospeed Trading, Inc., No. 07 C 4054, 2009 WL 2928095, at *4 (C.D. Ill. Sept. 9,
2009).

“Failure to make any of the three showings warrants denial of a motion to

vacate.” Wells Fargo Equip. Fin., Inc. v. PMRC Servs., LLC, No. 10 C 2438, 2011 WL
635861, at *2 (N.D. Ill. Feb. 11, 2011).
B.

Analysis

Defendant has not established the existence of a meritorious defense to the
original complaint sufficient to satisfy the third factor necessary to support vacating the
default judgment. “A ‘meritorious defense’ is not necessarily a winning one, but it is one
which is ‘supported by a developed legal and factual basis.’” Bluegrass Marine Inc. v.
Galena Road Gravel, Inc., 211 F.R.D. 356, 357 (S.D. Ill. 2002) (quoting Jones, 39 F.3d
at 165). Here, Defendant does not deny that he owes the money under the student
loan, or that he agreed to the terms of that loan, including the stated interest rate.
Defendant states only that he cannot afford to pay his outstanding loan balance, which
is not a proper defense to his contractual obligation. Moreover, Plaintiff has agreed to
work with Defendant on a payment plan based on his financial situation.

Since

Defendant has articulated no meritorious defense to this case, his motion to vacate the
default judgment must be denied. As a result, the Court need not address the other
factors required to set aside the default judgment. Wells Fargo Equip. Fin., Inc., 2011
WL 635861, at *2.3

3

The Court notes that it is also unclear whether Defendant has established good cause
for the default. In support of this factor, Defendant cites to his various family and health
problems, but “[c]ourts in this district have consistently held that a litigant’s ‘personal
circumstances,’ including health problems and/or family issues, do not constitute ‘good cause’

4

CONCLUSION
For all the reasons stated, Defendant’s Motion to Vacate Default Judgment of
July 10, 2015 (Doc. 11) is denied.
ENTER:

Dated: October 7, 2015

_____________________________
Sheila Finnegan
United States Magistrate Judge

or ‘excusable neglect’ for failing to file a responsive pleading.” Tygris Asset Finance, Inc., 2010
WL 2610652, at *2 (collecting cases).

5