Allstate Insurance Company v. Contreras et al
Filing
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OPINION AND ORDER: GRANTING 21 MOTION to Set Aside Default Pursuant to Rule 55(c) and Motion for Leave to File Answer to Complaint Instanter filed by Daniel Contreras, Raudel Contreras, Martha Robles-Moya and to file an answer instanter. Signed by Senior Judge James T Moody on 9/8/2011. (rmn)
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF INDIANA
HAMMOND DIVISION
ALLSTATE INSURANCE
COMPANY,
Plaintiff,
v.
DANIEL CONTRERAS, RAUDEL
CONTRERAS, MARTHA ROBLESMOYA, and KRYSTAL GILL,
Defendants.
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No. 2:10 CV 181
OPINION and ORDER
This matter is before the court on the motion of defendants Daniel Contreras,
Raudel Contreras, and Martha Robles-Moya (referred to herein as the “defendants”) to
set aside a clerk’s entry of default. (DE # 21.) This is the second time the court has
considered this motion. The allegations on which this case is based were outlined in
detail in the court’s first order (DE # 24) addressing defendant’s motion to set aside
default, so the court will only summarize them briefly here.
I.
BACKGROUND
Defendant Krystal Gill claims that she was injured when Raudel Contreras and
Martha Robles-Moya’s minor son, Daniel, discharged a handgun within their home,
striking Gill with a bullet. (DE # 1 ¶¶ 8, 9.) Gill sued Daniel and his parents in state
court. (Id. ¶ 7.) Plaintiff Allstate Insurance Company, the insurer of the home in which
the injury allegedly occurred, filed a complaint in this court, seeking a declaratory
judgment regarding its obligations, or possibly the lack thereof, with regard to Gill’s
injuries. (Id.)
As the court explained in its last order, the docket reveals that defendants were
properly served with process (DE ## 4, 6, & 7), but defendants did not file an answer to
the complaint. Allstate moved for and received a clerk’s entry of default against
defendants. (DE ## 11-13.) Defendants then moved to have the entry of default set
aside. (DE # 21.) In support of this motion, counsel for defendants, Mitchell Peters,
submitted an affidavit in which he attested that his clients were uneducated, were not
fluent in English, and misinterpreted the complaint that was served upon them as
simply another filing in the separate state court action filed against them by Gill. (DE
# 21-1 at 13.) Peters further attested that his clients mistakenly concluded that they did
not need to respond to the document or notify Peters of their receipt of the document.
Peters stated that he did not know about the filing of Allstate’s complaint in this court
until counsel for defendant Gill contacted him and informed him of the default
proceedings. (DE # 21-1 at 14.)
This court held that the explanation offered by Peters was inadequate evidence to
support the motion. The court held: “If defendants’ lack of education and difficulty with
the English language are the reasons for the default, defendants – the ones with firsthand knowledge of these facts – should provide this explanation to the court under oath
in the form of an affidavit, not their attorney.” (DE # 24 at 10.) The court afforded
defendants additional time within which to submit a supplemental filing and plaintiff
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time to file a response, if any. Defendants have filed supplemental affidavits (DE ## 27,
28) and plaintiff has filed a response (DE # 30). The motion is now ready for ruling.
II.
LEGAL STANDARD
FEDERAL RULE OF CIVIL PROCEDURE 55(c) states that “[t]he court may set aside an
entry of default for good cause.” A party seeking to vacate an entry of default prior to
the entry of final judgment must show: “(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). The Seventh Circuit Court of Appeals has employed a
“lenient standard” in the application of RULE 55(c) and has articulated a policy of
favoring trial on the merits over default judgment. Id. at 631; see also C.K.S. Eng’rs Inc. v.
White Mountain Gypsum Co., 726 F.2d 1202, 1205 (7th Cir. 1984) (collecting cases).1
III.
DISCUSSION
A.
Good Cause
Raudel Contreras and Martha Robles-Moya submitted affidavits, which they
signed with the assistance of an interpreter, to supplement their motion to set aside
entry of default. (DE # 27.) In his affidavit, Raudel Contreras attests that he received a
12th grade education in Mexico and is employed as a common laborer. (Id. at 2.) Robles1
The three-element test for determining whether a court should grant a motion
to set aside a clerk’s entry of default under RULE 55(c) is the same as the test for
determining whether a court should grant a motion to set aside a default judgment
under RULE 60(b), except that the court’s review of the latter type of motion is more
limited and stringent. Jones v. Phipps, 39 F.3d 158, 162 (7th Cir. 1994). The court has cited
to jurisprudence related to both rules in this order but has employed a lenient approach
given that the present motion is made under RULE 55(c).
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Moya similarly states, in her affidavit, that she received an 11th grade education in
Mexico and is employed as a common labor. (Id. at 4.) Both further attest that they have
a minimal ability to speak or understand English and do not read English at all. (Id. at 2,
4.) Both also attest that they have no knowledge of receiving plaintiff’s complaint. (Id.)
Daniel Contreras filed an affidavit stating that he has a 9th grade education and
is presently serving an eight-year sentence in the Westville Correctional Facility. (DE #
28 at 2.) He attests that he has received numerous documents from various lawyers with
regard to these matters and underlying criminal matters, and that he believed he had
lawyers representing him with respect to this case. (Id.) All of the defendants attest that
any failure to act on their part was based upon their inability to understand the
documents and their belief that they were represented in this matter. (DE # 27 at 2, 4;
DE # 28 at 2.)
The court finds that defendants have met their burden in demonstrating good
cause to set aside entry of default. Where a party does not willfully ignore the pending
litigation, but rather fails to properly abide by court procedures through inadvertence,
the element of good cause is established. Passarella v. Hilton Int’l Co., 810 F.2d 647, 677
(7th Cir. 1987) (vacating default judgment where the record revealed no willful pattern
of disregard for court’s orders and rules). Further, courts have found that a lack of
proficiency in English constituted good cause to set aside default where the default was
an innocent mistake resulting from the language barrier. See, e.g., Geico Cas. Co. v.
Beauford, No. 8:05-cv-697-T-24EAJ, 2006 WL 3848000, at *4 (M.D. Fla. Nov. 8, 2006);
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Equitable Life Assur. Society v. First Colonial Trust Co., No. 94 C 6362, 1996 WL 296592, at
*2 (N.D. Ill. May 31, 1996). In this case, the court finds that defendants’ default was not
the result of willful disregard for the procedures of this court, but rather was due to
inadvertence and, in the case of Robles-Moya and Raudel Contreras, linguistic
limitations. Therefore, the court finds that defendants have adequately established the
element of good cause.
B.
Quick Action
The second element the court must consider in reviewing defendants’ motion is
whether quick action was taken to seek relief from the entry of default. In this case,
defendants filed their motion to set aside default within seven days after learning of the
entry of default. (DE # 21 at 3.) This seven-day delay is reasonable enough under the
circumstances to constitute “quick action” for purposes of setting aside an entry of
default. Compare Cracco, 559 F.3d at 631 (motion to set aside entry of default filed eight
days after the entry is sufficiently prompt to meet the element of quick action), with
Jones v. Phipps, 39 F.3d 158, 165 (7th Cir. 1994) (delay of five weeks did not constitute
quick action); Zuelzke v. Tool Eng’g Co., Inc. v. Anderson Die Castings, Inc., 925 F.2d 226,
230 (7th Cir. 1991) (delay of four months “could hardly be described as prompt”);
Merrill Lynch Mortg. Corp. v. Narayan, 908 F.2d 246, 252 (7th Cir. 1990) (motion filed
nearly one year after answer was due was “egregiously tardy”). Accordingly,
defendants have established the second element of the RULE 55-derived test.
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C.
Meritorious Defense
The final element defendants must establish to justify setting aside entry of
default is whether they have a meritorious defense. A defendant’s “actual likelihood of
prevailing on his defenses is not the measure of whether he has a meritorious defense . .
. . A defense is meritorious if it is good at law so as to give the factfinder some
determination to make.” Bieganek v. Taylor, 801 F.2d 879, 882 (7th Cir. 1986). However, a
defendant must allege “more than . . . bare legal conclusions.” Breuer Elec. Mfg. Co. v.
Toronado Systs. of Am., Inc., 687 F.2d 182, 186 (7th Cir. 1982).
In this case, Allstate has sued to obtain a declaration that it has no duty to pay
Gill under the homeowners’ policy purchased by Raudel Contreras and Martha RoblesMoya for the injuries Gill sustained when Daniel Contreras discharged a gun on the
insured premises. Allstate essentially alleges that the policy excludes coverage for Gill’s
damages because Daniel’s actions were intentional and/or because Gill’s damages were
reasonably expected to result from Daniel’s actions. (DE # 22 at 9.) Defendants state that
their defense against Allstate’s suit will be that Daniel’s actions were accidental,
rendering the exclusions in the policy inapplicable. (DE # 21 at 4.) Allstate does not
dispute that if this theory were believed by a fact-finder, defendants would prevail in
this lawsuit; thus, defendants’ articulation of their defense is sufficient for purposes of
satisfying the third and final element of the RULE 55-derived test for setting aside an
entry of default. See Bieganek, 801 F.2d at 882; Breuer, 687 F.2d at 186.
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IV.
CONCLUSION
Because defendants have satisfied all of the elements of the applicable test for
setting aside an entry of default, the court GRANTS the motion of defendants RoblesMoya and Daniel and Raudel Contreras to set aside entry of default and to file an
answer instanter. (DE # 21.)
SO ORDERED.
Date: September 8, 2011
s/ James T. Moody
JUDGE JAMES T. MOODY
UNITED STATES DISTRICT COURT
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