Adams v. Keystone Properties, Inc.

Filing 10

MEMORANDUM AND ORDER granting 9 defendant's Motion to Set Aside Clerk's Entry of Default. Signed by Chief Judge J. Thomas Marten on 4/14/15. (mss)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS

GUADALUPE ADAMS,
Plaintiff,
v.

Case No. 6:14-CV-1409-JTM-KGG

KEYSTONE PROPERTIES, INC.
A Foreign Corporation,
Defendant.

MEMORANDUM AND ORDER
Plaintiff Guadalupe Adams seeks injunctive relief and attorney’s fees against defendant
Keystone Properties, Inc. for alleged violations of the Americans with Disabilities Act, 42 U.S.C.
§ 12181, et seq. (“ADA”). On February 12, 2015, plaintiff filed an Application for Clerks Entry
of Default (Dkt. 5) claiming that defendant failed to plead or otherwise respond to the
Complaint. The Clerk’s Entry of Default was entered on March 3, 2015. Dkt. 6. Before the
court is defendant’s Motion to Set Aside Clerk’s Entry of Default, filed on March 25, 2015. Dkt.
9. For the reasons stated below, defendant’s motion is granted.
I.

Factual and Procedural Background

Plaintiff commenced this action on December 8, 2014. Dkt. 1. On December 29, 2014,
plaintiff provided proof that defendant had been served via its registered agent, Corporate
Creations Network, Inc. (“Corporate Creations”), on or about December 19, 2014. Dkt. 4. After
defendant failed to respond within the prescribed amount of time, the clerk, upon motion of
plaintiff, entered default.

1

According to defendant, Corporate Creations emailed the Complaint and summons to Jeff
Roberts, defendant’s Director of Real Estate, on or about December 22, 2014. Dkt. 9, at 1.
However, Roberts did not learn about the Complaint or summons until February 2, 2015, when
he received an invoice from Corporate Creations. Dkt. 9, at 1. Upon inquiring what the invoice
was for, Roberts received, allegedly for the first time, a copy of the Complaint and summons.
Dkt. 9, at 1. According to defendant, Roberts subsequently discovered that Corporate Creations’
December 22, 2014, email containing the Complaint and summons was immediately sent to his
“junk” email folder, where it remained unread.

Dkt. 9, at 1-2.

Corporate Creations has

confirmed that its only method of notification was via email. Dkt. 9, at 2.
Upon its receipt of the Complaint and summons, defendant immediately tendered the
documents to its insurance carrier, AIG, assuming that its policy would cover an ADA
complaint. Dkt. 9, at 2. Further investigation has revealed that defendant’s insurance policy
does not, in fact, cover ADA complaints. Dkt. 9, at 2. On March 6, 2015, defendant received a
denial of coverage from AIG. Dkt. 9, at 2. Defendant then forwarded this denial of coverage,
along with the Complaint and summons, to its general legal counsel in Oklahoma. Dkt. 9, at 2.
Roberts was subsequently notified of the need to secure Kansas counsel, which he did on March
20, 2015. Dkt. 9, at 2.
II.

Legal Standard

Whether to set aside a clerk’s entry of default is solely within the discretion of the trial
court. Meissner v. BF Labs Inc., 2014 U.S. Dist. LEXIS 18714, at *1 (D. Kan. Feb. 14, 2014).
The court may “set aside an entry of default for good cause.” FED. R. CIV. P. 55(c). “The good
cause standard is something less than the excusable neglect showing which must be made for
relief from judgment under rule 60(b).” Perez v. Dhanani, 2015 U.S. Dist. LEXIS 12494, at *4

2

(D. Kan. Feb. 3, 2015) (citing Meissner, 2014 U.S. Dist. LEXIS 18714, at *1-2). Generally, the
court considers three factors when determining good cause under Rule 55(c): "(1) whether the
default was the result of culpable conduct of the defendant, (2) whether plaintiff would be
prejudiced if the default should be set aside, and (3) whether the defendant presented a
meritorious defense.” Hunt v. Ford Motor Co., 1995 U.S. App. LEXIS 24463, at *9 (10th Cir.
Aug. 29, 1995). These factors are not exclusive, and the court may consider other factors.
Olivas v. Brentwood Place Apartments, LLC, 2010 U.S. Dist. LEXIS 130933, at *6 (D. Kan. July
26, 2010).
The standard for setting aside an entry of default is liberal because "[t]he preferred
disposition of any case is upon its merits and not by default judgment." Crutcher v. Coleman,
205 F.R.D. 581, 584 (D. Kan. 2001) (quoting Gomes v. Williams, 420 F.2d 1364, 1366 (10th Cir.
1970)). The court must "balance the interests of the defendants in the adjudication of the case
on the merits, against the interest of the public and the court in the orderly and timely
administration of justice." McCook v. Flex Fin. Holding Co., 2008 U.S. Dist. LEXIS 35372, at
*5 (D. Kan. Apr. 29, 2008) (citing Hunt v. Kling Motor Co., 841 F. Supp. 1098, 1106 (D. Kan.
1993)). The Tenth Circuit has stated:
[T]he default judgment must normally be viewed as available only when the
adversary process has been halted because of an essentially unresponsive party. In
that instance, the diligent party must be protected lest he be faced with
interminable delay and continued uncertainty as to his rights. The default
judgment remedy serves as such a protection . . . . [A] workable system of justice
requires that litigants not be free to appear at their pleasure.
Kiewel v. Balabanov, 2011 U.S. Dist. LEXIS 49769, at *8 (D. Kan. May 9, 2011) (quoting In re
Rains, 946 F.2d 731, 732-33 (10th Cir. 1991)).

3

III.

Legal Analysis

At the outset, defendant notes that plaintiff has no objection to its Motion to Set Aside.
Dkt. 9, at 2-3. Indeed, the date for plaintiff to file a response has come and gone without
plaintiff’s objection. That alone, in the eyes of this court, at least at this early stage of litigation,
is sufficient to grant the Motion. However, in the interest of completeness, the court undertakes
the fuller analysis.
A.

Defendant’s Culpability
In determining culpability, the court must consider whether defendant “defaulted

willfully or has no excuse for the default.” Meisner, 2014 U.S. Dist. LEXIS 18714, at *2 (citing
United States v. Timbers Preserve, Routt Cnty., Colo., 999 F.2d 452, 454 (10th Cir. 1993)).
There is no such evidence of willful disobedience here. It appears that defendant did not become
aware of the lawsuit until almost one month after the answer was due. Upon learning of the
lawsuit, defendant timely turned the Complaint over to its insurance carrier, assuming that its
policy would cover ADA complaints. By the time that defendant learned that its policy did not,
in fact, cover such complaints, the clerk’s entry of default had already been entered. Defendant
then acted quickly to secure local counsel and file the pending motion.
B.

Risk of Prejudice to Plaintiff
There is no risk of prejudice to plaintiff. First, as noted above, plaintiff has no objection

to this motion. Dkt. 9, at 2-3. Furthermore, this litigation is in its infancy and it appears that
discovery has not even begun. The brief delay that will be caused by allowing defendant to
answer the complaint will not impair plaintiff’s ability to litigate her case. See Kiewel, 2011 U.S.
Dist. LEXIS 49769, at *8 (finding no prejudice in setting aside the clerk’s entry of default more

4

than eight months after it had been entered); see also McCook, 2008 U.S. Dist. LEXIS 35372, at
*7 (finding no prejudice where “[l]ittle discovery, if any, has been exchanged.”).
C.

Meritorious Defense
“The burden to show a meritorious defense is light. The party moving to set aside default

must make a sufficient elaboration of facts to permit the trial court to judge whether the defense,
if movant’s version were believed, would be meritorious.” McCook, 2008 U.S. Dist. LEXIS
35372, at *7 (quoting Super Film of Am., Inc. v. UCB Films, Inc., 2004 U.S. Dist. LEXIS 21643,
at *4 (D. Kan. Sept. 23, 2004)). Here, defendant alleges that the property in question, the Dollar
General location in Arkansas City, Kansas, was constructed in 2000 in compliance with the
ADA’s 1991 accessibility standards. Dkt. 9, at 4. Defendant is therefore under no obligation to
make modifications to align the property with the ADA’s 2010 standards. Dkt. 9, at 4. The
court finds defendant’s assertion to meet the minimal standard necessary to show a possible
meritorious defense.
IT IS THEREFORE ORDERED this 14th day of April, 2015, that defendant’s Motion
to Set Aside Clerk’s Entry of Default (Dkt. 9) is hereby granted.

s/J. Thomas Marten
J. Thomas Marten
Chief Judge

5