McDaniel v. The Prudential Insurance Company of America et al

Filing 23

OPINION AND ORDER: The Court GRANTS the Defendants' Motion 14 and VACATES the Entry of Default 9 . The Court DENIES the Plaintiff's Motion for Default Judgement 11 and GRANTS the Defendants leave to file their Answer and Affirmative and Additional Defenses and Counterclaim to Plaintiff's Complaint. Signed by Chief Judge Theresa L Springmann on 8/28/2017. (jss)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF INDIANA
FORT WAYNE DIVISION
APRIL McDANIEL,
Plaintiff,
v.
THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA and BENDIX
COMMERCIAL VEHICLE SYSTEMS, LLC
LONG TERM DISABILITY PLAN,
Defendants.

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CAUSE NO.: 1:17-CV-40-TLS

OPINION AND ORDER
This matter is before the Court on the Defendants’ Motion to Vacate Entry of Default and
for Leave to File their Answer and Affirmative and Additional Defenses and Counterclaim to the
Plaintiff’s Complaint (the “Motion to Vacate”) [ECF No. 14], filed May 12, 2017, and the
Plaintiff’s Motion for Default Judgment (the “Motion for Default”) [ECF No. 11], filed the same
day. On February 1, 2017, the Plaintiff filed her Complaint [ECF No. 1] against the Defendants,
The Prudential Insurance Company of America (“Prudential”), and Bendix Commercial Vehicle
Systems, LLC Long Term Disability Plan (the “Plan”). The Plaintiff is seeking payment of longterm disability (“LTD”) benefits allegedly due to her under a welfare benefit plan sponsored by
her employer, Bendix Commercial Vehicle Systems, LLC, and insured by Prudential. On
February 1, 2017, the Court issued summonses [ECF No. 3] to the Defendants. On February 3,
2017, the Defendants’ counsel was made aware that an action had been commenced by the
Plaintiff against the Defendants via a docket monitoring service the Defendants’ counsel
subscribes to. Thereafter, the Defendants state that their counsel periodically checked the docket
in this case for any evidence of service. On Friday, May 5, 2017, the Plaintiff filed an

Application for Clerk’s Entry of Default (the “Application”) [ECF No. 5], requesting that the
Clerk of the Court enter a default against the Defendants under Federal Rule of Civil Procedure
55(a). The Defendants state that as part of a periodic docket review that is typically conducted on
Fridays, the Defendants’ counsel discovered that the Application was filed. The Defendants also
state that they were never made aware that they were served with process in this action, nor did
they ever determine that the Plan had been served in any form. The Plaintiff states that she
served both Defendants via certified mail on or about March 7, 2017. (Pl.’s Verified Mot. for
Entry of Default, ECF No. 5.)
The full address to which the Plaintiff sent the certified mailings for each party is, “The
Prudential Insurance Company of America, Disability Management Services, P.O. Box 13480,
Philadelphia, PA 19176.” (Id. ¶¶ 3–4; Certified Mail Receipts, ECF No. 7.) According to the
Plaintiff, this P.O. Box is the address to which “many thousands” of disability claims are sent
each year. (Mot. ¶ 9, ECF No. 14.) The Plaintiff did not address or direct the certified mailings to
any specific individual. (Id.)
On Monday, May 8, 2017, the very next business day following the discovery of the
Application, the Defendants’ counsel contacted the Plaintiff, stating that service had been
insufficient, but that the Defendants were willing to defend the case on the merits. (Id. ¶ 10.) On
May 11, 2017, the Defendants proposed a draft stipulation to the Plaintiff’s Counsel by which
the parties would “agree to disagree regarding the propriety of service, [the] Plaintiff would
withdraw her motion for default, and [the] Defendants would answer the Complaint promptly.”
(Id. ¶ 11.) The Plaintiff’s counsel indicated that he would only agree to the stipulation provided if
the Defendants produced certain documents to the Plaintiff ahead of any Court-ordered schedule.
(Id.) The Defendants declined to accept the Plaintiff's demands because of the service of process

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issues. (Id.) That same day, while the parties continued their discussions, the Clerk of the Court
made an entry of default against the Defendants. The Defendants made an appearance thereafter
while they finalized their motion papers. (Id.)
The Defendants attempted to confer with the Plaintiff one last time before filing their
Motion to Vacate, sending an email to the Plaintiff’s counsel on May 12, 2017, indicating that
the Defendants would be moving to vacate the entry of default. (Id. ¶ 12.) The Plaintiff's counsel,
in turn, filed the Motion for Default Judgment, hours later. (Id.)

DISCUSSION
Entry of default must be vacated because the Defendants have good cause for the default,
took quick action to correct it, and have a meritorious defense to the Complaint. Federal Rule of
Civil Procedure 55(c) states: “The court may set aside an entry of default for good cause, and it
may set aside a default judgment under Rule 60(b).” 1
An order entering default before the entry of final judgment may be vacated if the
moving party shows: “(1) good cause for the default; (2) quick action to correct it; and (3) a
meritorious defense to the complaint.” Cracco v. Vitran Exp., Inc., 559 F.3d 625, 630 (7th Cir.
2009). While the same test applies for motions seeking relief from a default judgment under both
Fed. R. Civ. P. 55(c) and Fed. R. Civ. P. 60(b), the test is more liberally applied in the Rule 55(c)
context. Id. (citing United States v. Di Mucci, 879 F.2d 1488, 1495 (7th Cir. 1989)).

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The Court does not reach the question of whether it has personal jurisdiction over the
Defendants because of the Plaintiff’s defective service upon the Defendants, under Rule 60(b)(4). The
Court evaluates only the Defendants’ argument under Rule 55(c) because the Defendants’ requested relief
concerns only vacating the default, not dismissing the action. (Mot. to Vacate ¶ 27, ECF No. 14
(“WHEREFORE, for the reasons stated above, Defendants respectfully request that this Court vacate the
May 11, 2017, entry of default and allow Defendants leave to file their Answer and Affirmative and
Additional Defenses and Counterclaim to Plaintiff’s Complaint attached hereto as Exhibit B.”).)

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Here, the Defendants show good cause for the default. The Defendants were not properly
notified of the action and had no contact with the Plaintiff or her counsel until after the
Application was filed. The Defendants took quick action to correct the default. The Defendant’s
counsel contacted the Plaintiff’s counsel the same day the Application was filed and attempted to
reach an agreement, despite the Plaintiff’s attempted service. The Defendants’ counsel also filed
an appearance, despite the Plaintiff’s attempted service on May 11, 2017, within hours of the
Clerk’s Entry of Default, and subsequently filed their Motion to Vacate.
The Defendants have also set forth a meritorious defense to the Complaint, as evidenced
by the Defendants’ Answer and Affirmative and Additional Defenses and Counterclaim to the
Plaintiff’s Complaint (the “Answer”), attached as Exhibit B to the Motion to Vacate. The
Seventh Circuit has a policy of “favoring trial on the merits over default judgment.” Cracco, 559
F.3d at 631. Given the Seventh Circuit’s lenient standard for the application of Rule 55(c), an
answer, combined with a motion to vacate an entry of default is sufficient to show a meritorious
defense where, as here, it notifies the plaintiff and the court of the nature of its defense. Id.
The Plaintiff argues that the Defendants have failed to show good cause or a meritorious
defense. The Plaintiff at one point writes that the Defendants’ proposed Answer to the Plaintiff’s
Complaint is “akin to a ‘Did so! Did not!’ quarrel on the playground.” (Pl.’s Reply to Mot. to
Vacate 7, ECF No. 22.) The Court has reviewed the Defendants’ proposed Answer and finds
that, for the purposes of defeating default, the Defendants have set forth a meritorious defense. 2

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The Plaintiff argues that the Defendants’ proposed Answer is little more than conclusory, and,
therefore, insufficient. Analogously, the Seventh Circuit in Cracco assessed the plaintiff’s argument that
the defendant set forth an insufficient meritorious defense in his answer. Cracco, 559 F.3d at 631. There,
the defendant wrote: “[w]hile [p]laintiff was on leave, [the defendant] discovered numerous facts and
issues substantiating its decision to terminate Plaintiff, and upon the conclusion of his FMLA leave,
[p]laintiff was terminated for cause.” Id. The Seventh Circuit noted that the defendant “did not provide
any details about the facts supporting its decision to terminate [the plaintiff]. However, the Seventh
Circuit ultimately found:

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Accordingly, because the Defendants have shown good cause for the default, took quick
action to correct it, and demonstrated a meritorious defense to the Complaint, the entry of default
is vacated.

CONCLUSION
For the forgoing reasons, the Court GRANTS the Defendants’ Motion [ECF No. 14] and
VACATES the Entry of Default [ECF No. 9]. The Court DENIES the Plaintiff’s Motion for
Default Judgment [ECF No. 11] and GRANTS the Defendants leave to file their Answer and
Affirmative and Additional Defenses and Counterclaim to the Plaintiff’s Complaint [ECF
No. 14-2].
SO ORDERED on August 28, 2017.
s/ Theresa L. Springmann
CHIEF JUDGE THERESA L. SPRINGMANN
UNITED STATES DISTRICT COURT

Given the lenient standards that we have established for the application of
Rule 55(c), we believe that [the defendant] made a sufficient showing of a
meritorious defense. When the motion to vacate is read in conjunction with
[the defendant’s] answer, [the defendant’s] explanation for its decision
cannot be characterized as so conclusory as to be fatal. Rather, it notified
the plaintiff and the district court of the nature of [the defendant’s] defense
and provided the factual basis for that defense.
Id. Accordingly, the Court, upon review of the Defendants’ proposed Answer, finds that the Answer is not
“so conclusory as to be fatal.” See id.

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