Swoope v. Gary Community School Corporation et al
Filing
62
OPINION AND ORDER Defendants 56 Motion to Set Aside Clerks Entry of Default is GRANTED and the Clerk's entry of default as to Defendants Gary Community School Corporation, Dr. Myrtle Campbell, and Dr. Cordia Moore, is ORDERED VACATED.Additiona lly, Plaintiffs Verified Motion for Default Judgment as to Defendant Gary Community School Corporation DE 35 , and Plaintiffs Verified Motion for Default Judgment as to Defendants Campbell and Moore DE 37 , are both DENIED AS MOOT. Finally, the Clerk is ORDERED to VACATE the hearing currently set for March. Signed by Judge Rudy Lozano on 2/22/12. (kjp)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF INDIANA
HAMMOND DIVISION
DR. DAVID L. SWOOPE, JR.
Plaintiff,
vs.
GARY COMMUNITY SCHOOL
CORP. et al.,
Defendants,
)
)
)
)
)
)
)
)
)
)
Case No. 2:10-CV-423-RL
OPINION AND ORDER
This matter is before the Court on the: (1) Defendants’ Motion
to Set Aside Clerk’s Entry of Default, filed by Defendants, Gary
Community School Corporation, Dr. Myrtle Campbell, individually and
in her official capacity, and Dr. Cordia Moore, individually and in
her
official
capacity,
on
February
9,
2012
(DE
#56);
(2)
“Plaintiff’s Verified Motion for Default Judgment as to Defendant
Gary Community School Corporation,” filed by Plaintiff, Dr. David
Swoope, on August 15, 2011 (DE #35); and (3) “Plaintiff’s Verified
Motion for Default Judgment as to Defendants Campbell and Moore,”
filed by Plaintiff, Dr. David Swoope, on August 15, 2011 (DE #37).
For the reasons set forth below, the motion to set aside entry of
default (DE #56) is GRANTED and the Clerk's entry of default as to
Defendants Gary Community School Corporation, Dr. Myrtle Campbell,
and
Dr.
Cordia
Moore,
are
ORDERED
VACATED.
Additionally,
“Plaintiff’s Verified Motion for Default Judgment as to Defendant
Gary Community School Corporation” (DE #35), and “Plaintiff’s
Verified Motion for Default Judgment as to Defendants Campbell and
Moore” (DE #37), are both DENIED AS MOOT.
Finally, the Clerk is
ORDERED to VACATE the hearing currently set for March 6, 2012.
BACKGROUND
Plaintiff filed suit against a number of defendants on October
25,
2010.
On
April
26,
2011,
this
Court
granted
an
order
dismissing the claims against Dr. Vernon G. Smith and Dr. Stanley
Wiegle (DE #24).
The claims against Defendants, Gary Community
School Corporation (“GCSC”), Dr. Myrtle Campbell, and Dr. Cordia
Moore, remained pending.
All parties agree that service was
perfected to Defendants, GCSC, Dr. Campbell, and Dr. Moore (DE
##15, 16, 20), but no one responded to the complaint on their
behalf.
The Clerk entered a default against GCSC on March 9, 2011
(DE #23), and entered default against Dr. Campbell and Dr. Moore on
February 20, 2011 (DE #19).
Plaintiff then moved for default
judgment as to GCSC (DE #35), and Defendants Dr. Cordia Moore and
Dr. Campbell (DE #37), on August 15, 2011.
Following several
months of Plaintiff briefing his request for default judgment, and
this Court denying his request for a jury trial on damages, in an
order dated January 23, 2012, this Court set the motions for
default judgment for an evidentiary hearing to determine the amount
of damages, and in its order, directed the Clerk to send a copy of
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the order to the addresses where service was purportedly obtained
on Defendants (DE #54).
Seventeen days after this Court set the
hearing date for the motion for default judgment, Defendants’
counsel filed an appearance and a motion to set aside the entries
of default (DE ##55, 56).
In the affidavit attached to the motion to set aside default,
corporate counsel for GCSC attests that GCSC, Dr. Campbell, and Dr.
Moore,
provided
her
with
their
summons
and
complaint
represented in this matter back in October 2010.
Hatcher Aff. ¶ 4.)
to
be
(DE #57-1,
In 2010, she “requested that [her] assistant
contact outside counsel so that the Defendants would be provided
legal representation in this matter.”
(Id. ¶ 5.)
“[O]utside
counsel was never properly notified and retained in this matter,
even though I thought outside counsel had been retained.”
6.)
(Id. ¶
She “did not enter [her] appearance in this current matter
because [she] was under the impression that outside legal counsel
had been retained.”
(Id. ¶ 7.)
She did not receive any of the
verified applications for default, which “would have given [her]
the opportunity to be informed that outside counsel had not been
retained and therefore immediately defend the case.”
(Id., ¶¶ 8,
9.)
Defendants argue that the entries of default should be set
aside because Plaintiff did not serve them with the applications
for the Clerk’s entry of default or the applications for default
3
judgment.
Additionally, they argue that Defendants were not
personally negligent, Plaintiff misrepresented to the Clerk that
Defendants were served, and that they have a meritorious defense.
(See DE #57.)
In response, Plaintiff argues that he was not
required to serve notice on Defendants of the applications for
entry
of
default
or
default
judgment,
Defendants
have
not
demonstrated good cause for their default, they failed to take
quick action to correct the entry of default, and they do not have
a meritorious defense.
(See DE #59.)
DISCUSSION
Generally, when a movant seeks relief from entry of a default
before entry of judgment, Rule 55(c) applies, but a request to set
aside a default judgment is controlled by Rule 60.
Merrill Lynch
Mortg. Corp. v. Narayan, 908 F.2d 246, 252 (7th Cir. 1990).
The
standards for determining whether to vacate an entry of default
under Rule 55 or a default judgment under Rule 60 are essentially
the same, although the test is applied more liberally when default
judgment has not yet been entered.
See Bluegrass Marine Inc. v.
Galena Road Gravel, Inc., 211 F.R.D. 356, 357 (S.D. Ill. 2002).
This circuit favors a policy of promoting a trial based on the
merits, rather than default judgments.
Cracco v. Vitran Express,
Inc., 559 F.3d 625, 630-31 (7th Cir. 2009); see also C.K.S.
Engineers, Inc. v. White Mountain Gypsum Co., 726 F.2d 1202, 1205
4
(7th Cir. 1984) (a “default judgment, like a dismissal, is a harsh
sanction
which
should
usually
be
employed
only
in
extreme
situations.”).
Under
both
Rule
55
and
Rule
60,
the
moving
party
must
demonstrate good cause for the default, quick action to correct it,
and a meritorious defense. See Passarella v. Hilton Int'l Co., 810
F.2d 674, 676 (7th Cir. 1987); Bluegrass, 211 F.R.D. at 357. Here,
the test for setting aside a default should be applied less
stringently because no default judgment has been entered. Jones v.
Phipps, 39 F.3d 158, 162 (7th Cir. 1994). Nevertheless, Defendants
must still show three things: (1) good cause for the default; (2)
quick action to correct the default; and (3) the existence of a
meritorious defense.
United States v. Indoor Cultivation Equip.
From High Tech Indoor Garden Supply, 55 F.3d 1311, 1313 (7th Cir.
1995).
This “lenient” standard favors trials on the merits.
Cracco, 559 F.3d at 631.
Defendants first contend that there is good cause for the
default
because
Plaintiff
did
not
give
them
notice
of
the
applications for entry of default and default judgment, he merely
filed the motions electronically.
Federal Rule of Civil Procedure
Rule 55 provides in pertinent part, that:
If the party against whom a default judgment is
sought
has
appeared
personally
or
by
a
representative, that party or its representative
must be served with written notice of the
application at least 7 days before the hearing.
5
Fed. R. Civ. P. 55(b)(2).
In this case, Defendants did not have an
appearance on file when Plaintiff applied for entry of default in
February 2011, or when Plaintiff moved for default judgment in
August
case.
2011, nor did they have any involvement whatsoever in the
In fact, attorney Coleman just recently filed an appearance
on behalf of Defendants in February 2012.
Thus, it is undisputed
that Defendants never personally appeared or by a representative,
in
this
case
until
very
recently.
Under
the
clear
rules,
Plaintiff’s counsel had no legal duty to contact Defendants prior
to seeking entry of default or default judgment.
However, this
Court notes that it certainly would have been a courteous approach
to send notice (and one that this Court encourages), and it is
customary to give notice of seeking default.
See Passarella, 810
F.2d at 677 (criticizing defendant for not extending the “usual
professional courtesy” of “informing the defendant before the entry
of default judgment”).
Thus, Plaintiff’s counsel’s failure to
serve Defendants with notice of the entry of default or default
judgment does not constitute good cause for the default.
However, Defendants have demonstrated good cause because this
does not appear to be a case where Defendants or their attorneys
purposely avoided participating in this case.
Rather, good cause
for the default has been demonstrated by showing that the failure
to respond to the complaint was inadvertent.
GCSC’s corporate
counsel asked her assistant to secure outside legal counsel to
6
handle this matter, and although that counsel was never properly
retained, GCSC’s counsel believed that outside counsel was retained
and was handling the litigation.
(Hatcher Aff. ¶¶ 5-6.)
While
corporate counsel surely should have followed up with the case, her
mistake seems one of inadvertence, and not willful refusal to
participate in litigation.
where
a
party
has
“‘Good cause’ cannot be established
exhibited
carelessness, or negligence.”
willful
disregard
for
duties,
SJ Properties Suites v. STJ, P.C.,
Nos. 09-C-0533, 09-C-0569, 2009 WL 4640633, at *6 (E.D. Wis. Nov.
30, 2009) (citing Jones v. Phipps, 39 F.3d 158, 162 (7th Cir.
1994)). “‘Good cause’ required by Rule 55(c) is not intended to be
difficult to demonstrate and is not synonymous with the excusable
neglect standard applied in other contexts.”
McCarthy v. Fuller,
No. 1:08-cv-994-WTL-DML, 2009 WL 3617740, at *3 (S.D. Ind. Oct. 29,
2009).
Here, there is no evidence of an intentional or willful
disregard of the process, and that, coupled with the Seventh
Circuit’s preference for adjudication on the merits of a claim, at
this stage in the proceedings, when only default has been entered,
leads the Court to find that there is good cause for the default.
The second prong Defendants must demonstrate is that they took
quick action to correct the entry of default. Seventeen days after
this
Court
set
the
hearing
date
for
the
motion
for
default
judgment, and ordered the Clerk to mail a copy, Defendants’ counsel
filed an appearance and a motion to set aside the entries of
7
default (DE ##55, 56).
This satisfies the promptness requirement.
Finally, Defendants must demonstrate a meritorious defense.
Zuelzke Tool & Engineering Co., Inc. v. Anderson Die Castings,
Inc., 925 F.2d 226, 229 (7th Cir. 1991).
The meritorious defense
prong requires only that a defendant “notif[y] the plaintiff and
the district court of the nature of [its] defense and provide []
the factual basis for that defense.”
Cracco, 559 F.3d at 631. “A
meritorious defense is not necessarily one which must, beyond a
doubt, succeed in defeating a default judgment, but rather one
which at least raises a serious question regarding the propriety of
a default judgment and which is supported by a developed legal and
factual basis.”
Jones, 39 F.3d at 165.
Defendants have set forth
a meritorious defense, arguing that Plaintiff was an employee at
will, and that he failed to comply with the Indiana Tort Claims
Act.
In sum, the Court finds that the purpose and intent of Rule
55(c) has been satisfied, there is good cause to set aside the
default, and that vacating the default against Defendants fulfills
the policy of favoring a trial on the merits.
CONCLUSION
For the aforementioned reasons, Defendants’ Motion to Set
Aside Clerk’s Entry of Default is GRANTED and the Clerk's entry of
default as to Defendants Gary Community School Corporation, Dr.
8
Myrtle
Campbell,
and
Dr.
Cordia
Moore,
is
ORDERED
VACATED.
Additionally, “Plaintiff’s Verified Motion for Default Judgment as
to Defendant Gary Community School Corporation” (DE #35), and
“Plaintiff’s Verified Motion for Default Judgment as to Defendants
Campbell and Moore” (DE #37), are both DENIED AS MOOT.
Finally,
the Clerk is ORDERED to VACATE the hearing currently set for March
6, 2012.
DATED: February 22, 2012
/s/ RUDY LOZANO, Judge
United States District Court
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