Federal Insurance Company as subrogee of Bama Air Inc and Bridgeport Associates, Inc. v. Cessna Aircraft Company et al

Filing 39

MEMORANDUM AND ORDER granting 32 Motion to Set Aside 31 Clerks Entry of Default. Defendant may respond to the complaint on or before 10/18/2017. Signed by District Judge John W. Lungstrum on 09/28/2017. (ses)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS

FEDERAL INSURANCE COMPANY,

)
)
Plaintiff,
)
)
v.
)
)
TAT TECHNOLOGIES,
)
)
Defendant.
)
)
_______________________________________)

Case No. 16-2755-JWL

MEMORANDUM AND ORDER
This product liability action by plaintiff Federal Insurance Company as subrogee
presently comes before the Court on the motion by defendant TAT Technologies, Ltd.
(“TAT”) to set aside the Clerk’s entry of default (Doc. # 32). For the reasons set forth
below, the motion is granted, and TAT may respond to the complaint on or before
October 18, 2017.
Plaintiff filed this action against TAT and two other defendants on November 3,
2016. On June 30, 2017, plaintiff moved for a default judgment against TAT, based on
plaintiff’s alleged service of process on TAT on January 30, 2017, by international mail.
By Memorandum and Order of July 7, 2017, the Court denied the motion for three
independent reasons: first, plaintiff had not obtained entry of default from the Clerk
pursuant to Fed. R. Civ. P. 55(a); second, there was not yet any basis for judgment
against all three defendants, who could be jointly liable; and third, plaintiff had not

demonstrated effected service on TAT. Plaintiff then set about addressing those three
impediments cited by the Court: on August 18, 2017, plaintiff filed a proof of service
on TAT under the Hague Convention, which service occurred on April 30, 2017; on
August 21, 2017, plaintiff applied for and obtained a Clerk’s entry of default based on
that proof of service; and on August 31, 2017, plaintiff and the other two defendants
filed a stipulation of dismissal (without prejudice) of the claims against those defendants.
On August 24, 2017, TAT filed the instant motion, by which it asks the Court to set aside
the entry of default and to grant it 20 days in which to respond to plaintiff’s complaint.
A court may set aside an entry of default for “good cause.” See Fed. R. Civ. P.
55(c). In deciding whether to set aside an entry of default, a district court considers
whether the default was willful, whether setting it aside would prejudice the opposing
party, and whether a meritorious defense is presented, although the court need not
consider all of those factors and may consider other factors as well. See Guttman v.
Silverberg, 167 F. App’x 1, 4 (10th Cir. 2005) (unpub. op.) (citing Dierschke v.
O’Cheskey, 975 F.2d 181, 183 (5th Cir. 1992)); see also Hunt v. Ford Motor Co., 65
F.3d 178, 1995 WL 523646, at *3 (10th Cir. Aug. 29, 1995) (unpub. op.) (citing
Dierschke in applying same factors); School-Link Tech., Inc. v. Applied Resources, Inc.,
471 F. Supp. 2d 1101, 1119 (D. Kan. 2007) (Lungstrum, J.) (citing Hunt in applying
same factors). “The good cause standard for setting aside an entry of default poses a
lesser standard for the defaulting party than the excusable neglect which must be shown
for relief from a default judgment.” See School-Link, 471 F. Supp. 2d at 1119 (citing
2

Dennis Garberg & Assocs., Inc. v. Pack-Tech Int’l Corp., 115 F.3d 767, 775 n.6 (10th
Cir. 1997)).
The Court concludes in its discretion, based on a consideration of these factors,
that the Clerk’s entry of default should be set aside. First, with respect to TAT’s
culpability, plaintiff cites its various attempts to send the summons and complaint to
TAT in Israel, but as the Court previously concluded, plaintiff has not shown that it
effected proper service by those efforts. Plaintiff now relies on service through the
Hague Convention. TAT does not directly challenge the propriety of that service,
although it notes that the plaintiff’s proof of service does not make clear who signed for
the receipt on behalf of TAT. TAT has also provided an affidavit stating that those
documents were not routed properly to the responsible people at TAT. Based on these
facts, the Court is not persuaded that TAT acted willfully or is especially culpable in
failing to respond to the complaint.
Second, plaintiff has not alleged any prejudice that it would suffer from the delay
in the litigation of its claims against TAT. Moreover, as TAT notes, plaintiff delayed
prosecuting its suit against TAT, as plaintiff did not obtain service on TAT until April
30, 2017, nearly five months after suit was filed, and plaintiff itself did not receive notice
of that service until the end of July.
Third, TAT has at least identified possible defenses based on the statute of
limitations and a lack of personal jurisdiction.
Finally, and perhaps most importantly, there is a strong preference for the
3

disposition of litigation on the merits. See Gulley v. Orr, 905 F.2d 1383, 1386 (10th Cir.
1990) (given that preference and the lack of prejudice, district court did not abuse its
discretion in denying a motion for default judgment). This litigation remains in the
earliest stages, and plaintiff has not identified any prejudice here. Thus, the Court
concludes that plaintiff’s claims against TAT should be decided on their merits, and
accordingly, it sets aside the entry of default and grants TAT 20 days in which to
respond to the complaint.

IT IS THEREFORE ORDERED BY THE COURT THAT the motion by
defendant TAT Technologies, Ltd. to set aside the Clerk’s entry of default (Doc. # 32)
is hereby granted. Defendant may respond to the complaint on or before October 18,
2017.

IT IS SO ORDERED.

Dated this 28th day of September, 2017, in Kansas City, Kansas.

s/ John W. Lungstrum
John W. Lungstrum
United States District Judge

4

_