Banks v. Kottemann Law Firm
RULING AND ORDER denying 16 and 41 Motion to Set Aside Clerk's Entry of Default and to Compel Arbitration. Signed by Judge John W. deGravelles on 3/31/2021. (SWE)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF LOUISIANA
individually and on behalf of
all others similarly situated
KOTTEMANN LAW FIRM
individually and on behalf of
all others similarly situated
KTTEMANN LAW FIRM, ET AL.
RULING AND ORDER
This matter comes before the Court on the Motion to Set Aside Clerk’s Entry of Default
and to Compel Arbitration (Docs. 16, 41) filed by Defendant Kottemann Law Firm (“Defendant”).
Plaintiff Ericka Banks (“Plaintiff”) opposes the motion.1 (Docs. 22, 42.) Defendant has filed a
reply. (Doc. 27.) Oral argument is not necessary. The Court has carefully considered the law, facts
in the record, and arguments and submissions of the parties and is prepared to rule. For the
following reasons, Defendant’s motion is denied.
After this case was consolidated with King v. Kottemann Law Firm, No. 20-cv-340-JWD-EWD on November 30,
2020, Defendant re-submitted its previous Motion to Set Aside Clerk’s Entry of Default and to Compel Arbitration on
December 3, 2020, causing Doc. 16 to become Doc. 41. Plaintiff also resubmitted her Opposition on December 24,
2020 causing Doc. 22 to become Doc. 42. Defendant did not re-submit its Reply. The most recent document in the
record will be used as the reference.
This is a putative class action brought pursuant to the Fair Debt Collection Practices Act
("FDCPA"), 15 U.S.C. § 1692, et seq. Defendant is Kottemann Law Firm, a Louisiana company
that uses mail, telephone, or facsimile in a business, the principal purpose of which is the collection
of debts. (Compl. ¶¶ 8–10, Doc. 1.) Plaintiff is a Louisiana resident (id. ¶ 7) who allegedly incurred
an obligation to First Heritage Credit of Louisiana, LLC (“FHC”) (id. ¶ 12). Thereafter, FHC “or
a purchaser, assignee, or subsequent creditor” contracted with Defendant to collect on the alleged
debt owed. (Id. ¶ 16.) In connection with this debt, on December 17, 2018, Defendant sent Plaintiff
a collection letter.2 (Id. ¶ 18.)
Based on this letter, Plaintiff brings three causes of action against Defendant, alleging that
Defendant’s debt-collection practices violated various provisions of the FDCPA. Specifically,
Plaintiff alleges that Defendant violated 15 U.S.C. § 1692(e) by falsely representing the amount
of the debt, threatening to take action that cannot legally be taken or that is not intended to be
taken, and using false, deceptive and misleading representations in connection with the collection
of a debt, (id. ¶¶ 44–48); 15 U.S.C. § 1692(f) by attempting to collect an amount not expressly
authorized by the agreement creating the debt or permitted by law, (id. ¶¶ 49–53); and finally, 15
U.S.C. § 1692(g) by overshadowing the validation notice (id. ¶¶ 54–57).
The collection letter in King is identical to the one in Banks. Likewise, both plaintiffs bring identical claims under
the FDCPA. For an in-depth description of the collection letter and Plaintiff’s claims, see this Court’s Ruling on
Defendant’s Motion to Dismiss in King, issued on March 30, 2021 (Doc. 50).
Plaintiff seeks, inter alia, declaratory and injunctive relief, actual and statutory damages,
attorney’s fees, and any other relief this Court “may deem just and proper.” (Id. ¶ 6; see also Doc.
1 at 11.)
B. Procedural History
On June 10, 2019, Plaintiff filed her class action Complaint against Defendant. (Doc. 1.)
On June 11, 2019, a summons was issued to Defendant and a Scheduling Conference was set for
August 8, 2019. (Docs. 2, 3.) On June 29, 2019, Defendant was served personally through its
registered agent, owner, and principal attorney, Stanley Kottemann. (Doc. 6.) Defendant’s answer
was due by July 22, 2019. (Id.) Due to Defendant’s failure to submit an answer by that date, on
July 24, 2019, the Court reset the Scheduling Conference for September 5, 2019. (Doc. 7.)
On August 20, 2019, Plaintiff moved for the Clerk’s Entry of Default. (Doc. 8.) On August
21, 2019, the Clerk’s Entry of Default was entered. (Doc. 9.) On that same day, Plaintiff submitted
a status report and a request to cancel the September 5, 2019 Scheduling Conference. (Doc. 10.)
On August 23, 2019, the Court cancelled the Scheduling Conference and requested a status
report by November 25, 2019. (Doc. 11.) On September 26, 2019, Plaintiff filed a Motion for
Leave to Conduct Discovery and to Waive the Meet-and-Confer Requirements of FRCP 26(f), Due
to Defendant’s Refusal to Participate in This Action. (Doc. 12.)
On December 5, 2019, the Court granted Plaintiff’s motion and directed Plaintiff’s counsel
to submit proposed discovery demands to the Court for review by December 20, 2019. (Docs. 13,
14.) On January 13, 2020, the Court permitted Plaintiff to propound discovery on Defendant after
modifying the proposed discovery. (Doc. 15.)
On May 8, 2020, Defendant filed a Motion to Set Aside Clerk’s Entry of Default and to
Compel Arbitration. (Doc. 16.) On May 28, 2020, Plaintiff filed an opposition. (Doc. 22.) On June
22, 2020, Defendant filed a reply. (Doc. 27.)
On November 30, 2020, the King case was transferred to this Court and consolidated with
the instant case upon Defendant’s motion. As Judge Jackson explained in his Ruling and Order on
the motion to consolidate, “both actions [were] filed on behalf of Louisiana consumers under the
[FDCPA]. Both actions involve the same attorneys, the same Defendant, functionally the same
claims, a request for class certification, and call for the same relief.”3 (King, No. 20-340, Doc. 19
at 1–2.) Thereafter, Defendant re-submitted its original motion and accompanying brief and
Plaintiff re-submitted her opposition. (See Docs. 41, 42.) Defendant did not re-submit its reply.
A. Defendant’s Memorandum (Doc. 41-1)
In support of its motion, Defendant argues that the entry of default should be set aside for
“good cause” shown under Federal Rule of Civil Procedure 55(c). Defendant first points out that
the default entry will only have a limited effect if it is not set aside. (Doc. 41-1 at 6–7.) According
to Defendant, a default entry is not an unqualified admission of liability; it does not establish the
amount of damages; and it does not admit facts in the Complaint that are not well-pleaded. (Id. at
7.) Therefore, even if the default entry is not set aside, Defendant can still contest the sufficiency
of the Complaint. (Id.)
Next, Defendant urges the Court to set aside the default entry because all three of the factors
set forth in Lacy v. Sitel Corp., 227 F.3d 290, 291–92 (5th Cir. 2000) are met. (Id. at 8.) Defendant
first contends that its default was not willful. (Id. at 9.) In support of this contention, Defendant
In King, both Kottemann Law Firm and Stanley Kottemann are named as defendants; however, in this case, only
Kottemann Law Firm is named as a defendant.
relies on the affidavit of Mr. Kottemann (hereinafter “Kottemann Aff.,” Doc. 41-3), who attests
that: (1) on June 29, 2019, “an unknown individual dropped a summons and complaint” on his car
(id. ¶ 5); (2) he then “promptly notified FHC of the complaint” (id. ¶ 6); (3) thereafter, he was
“repeatedly assured by FHC that [it] ‘will take care of’ the complaint,” which he “reasonably
understood” to mean that FHC had taken or would take action to resolve the matter directly with
Plaintiff either by demanding arbitration or settling (id. ¶¶ 8–9); (4) he reached out to FHC’s legal
representative after receiving emails from Plaintiff’s counsel, but “again” was reassured by FHC
that it was handling the matter (id. ¶ 9); (5) after receiving discovery from Plaintiff’s counsel, he
“began to attempt to inquire further with FHC” about the status of the case, but was unable to reach
FHC’s representatives due to COVID-19 (id. ¶ 10); (6) “upon investigation” he learned of the
Clerk’s entry of default and engaged the services of legal counsel (id. ¶ 11); and (7) he followed
all legal and ethical guidelines in handling this matter (id. ¶ 12). (Doc. 41-1 at 9.) Thus,
“Defendant’s failure to respond was not due to bad faith, an attempt to take advantage of the
Plaintiff, or an attempt to interfere with the legal process.” (Id.)
Second, Defendant avers that its default has not legitimately caused delay or increased
Plaintiff’s legal fees. (Id. at 10.) Further, “Plaintiff cannot complain about losing any right to a
jury trial because there is no recognized right to a jury trial in FDCPA cases” in the Fifth Circuit.
(Id. at 11 (citing Moore v. Frazier, 35 Fed. Appx. 386 (5th Cir. 2002) (unpublished)).)
Third, Defendant presents three “meritorious defenses” to Plaintiff’s claims: (1) that there
is a binding arbitration agreement; (2) that Plaintiff lacks standing; and (3) that Plaintiff’s claims
are subject to dismissal under Rule 12(b)(6). (Id. at 11–21.) Accordingly, this factor also weights
in favor of setting aside the default. (Id. at 21.)
Finally, the “most important discretionary factor that the Court considers is the fact that
the Defendant is ready and willing to arbitrate and only if necessary, litigate the case on its merits.”
In closing, Defendant notes that because it provided a reasonable explanation for its
untimely response, there is no injustice to Plaintiff, and it has demonstrated meritorious defenses,
good cause exists to set aside the Clerk’s Entry of Default. (Id. at 22.) Moreover, given that there
is only an entry of default, relief in this case should be “more readily granted than a motion to set
aside a default judgment.” (Id. at 21 (quoting In re Dierschke, 975 F.2d 181, 184 (5th Cir. 1992)).)
As such, the entry of default should be vacated, Defendant’s request for arbitration should be
granted, and this case should be stayed pending the outcome of arbitration. (Id. at 22.)
B. Plaintiff’s Opposition (Doc. 42)
In opposition, Plaintiff argues that the Court should not set aside the default entry because
“Defendant’s default was both willful and intentional.” (Doc. 42 at 11.) In broad strokes, the crux
of Plaintiff’s argument is as follows:
The plain and simple facts of this case demonstrate that the Kottemann Law Firm
decided to ignore this case at every stage of the litigation. It decided to ignore the
Complaint personally served on it. It decided to ignore the Plaintiff’s July 30 and
August 13 emails, each warning that a default would be entered if the Defendant
failed to interpose a response to the Complaint. It decided to ignore the August 21,
2019 Clerk’s Entry of Default. It decided to ignore the Plaintiff’s Status Report and
subsequent Motion to Conduct Class Discovery. It decided to ignore the class
discovery demands and deposition served on it. In short, the Kottemann Law Firm
willfully, intentionally and consciously decided to default in this case. Now that it
realized that its head-in-the-sand strategy had backfired, the Kottemann Law Firm
seeks to vacate its default, basing its Motion on an excuse that is demonstrably and
(Id. at 29.) Plaintiff then takes issue with Defendant’s proffered excuse for failing to take any
action in this case. (Id. at 12.) Although Defendant claims it thought FHC was handling the case,
and that it believed FHC had settled with Plaintiff or entered arbitration, this “excuse” cannot
withstand judicial scrutiny for two reasons.
First, the record demonstrates that Defendant was acutely aware at every stage in these
proceedings that Plaintiff’s claims were not settled or being arbitrated. (Id. at 15.) As detailed in
the declaration submitted by Plaintiff’s counsel (hereinafter “Zelman Dec.,” Doc. 42-1), Mr.
Zelman called, emailed, and wrote to Mr. Kottemann at every step in this litigation. (Id. at 12–13.)
Attached to Mr. Zelman’s declaration are copies of two emails sent to Defendant before Plaintiff
moved for an entry of default: one on July 30, 2019, and the other on August 13, 2019. (See Docs.
42-2, 42-3.) Mr. Kottemann acknowledges receiving these emails in his affidavit. (Id. (citing
Kottemann Aff., Doc 41-3).) Thus, Plaintiff reasons that “any misconceptions Mr. Kottemann had
about this litigation were clearly set straight when he was twice warned about the impending
default on July 30 and August 13.” (Id. at 15.) Plaintiff also points out that Mr. Kottemann could
have “easily” checked the docket to see if the case was settled or in arbitration, before choosing to
let a default be entered. (Id. at 15 n.2, n.3.) Plaintiff then cites to analogous cases wherein similar
excuses were insufficient to establish “good cause” to set aside an entry of default. (Id. at 13–15.)
Second, Plaintiff emphasizes that Defendant is not some unsophisticated party unaware
with the litigation process. Instead, Defendant is a law firm, and Mr. Kottemann is an attorney
with over twenty years of experience. (Id. at 7, 17.) Plaintiff cites to Fed. Sav. & Loan Ins. Corp.
v. Kroenke, 858 F.2d 1067 (5th Cir. 1988) which demonstrates that when the defaulting party is
an attorney, his professional knowledge—especially as it relates to deadlines—may be taken into
account when determining whether his default was willful. (Id. at 17.)
In Kroenke, the defendant-attorney moved to vacate a default judgment one day after it was
entered, “claiming he believed that he had an informal arrangement with opposing counsel that no
default would be sought while settlement negotiations were ongoing.” (Id. at 16–17.) The district
court denied the defendant’s motion and the Fifth Circuit affirmed:
It is clear to us that the defendant's argument here that his reliance on vague
understandings with FSLIC resulted in “surprise” or “excusable neglect” is
meritless. Kroenke himself was an attorney, and whatever may have been his
agreement with opposing counsel, he offers no reason, explanation or justification
for ignoring the express admonition of the district court to file a responsive pleading
within ten days or have a preliminary entry of default entered against him….
Furthermore, Kroenke's argument that he has demonstrated the “good cause”
required under Rule 55(c) by showing that he was somehow misled by opposing
counsel, fails because Kroenke was explicitly directed by the court on July 6, 1987
to file a responsive pleading with the court within ten days. As an attorney, Kroenke
knew what was expected of him and has no excuse for not following the express
instruction of the court. Thus[,] it is clear to us that the district court did not abuse
its discretion in rejecting Kroenke's “good cause” argument and entering an order
of default against him.
(Id. at 16–17 (quoting Kroenke, 858 F.2d at 1070–71).)
Plaintiff represents: If the Kroenke defendant’s excuse—premised on a supposed
misunderstanding with opposing counsel—was “insufficient ‘excusable neglect’ to warrant a
finding of ‘good cause’ under FRCP 55(c), the Defendant’s excuse here is a fortiori insufficient
as a matter of law, because Defendant cannot claim any such basis for completely ignoring the
repeated warnings that a default would be entered against it.” (Id. at 17; see also id. at 18 (citing
In re Chinese Manufactured Drywall Prod. Liab. Litig., 742 F.3d 576, 595 (5th Cir. 2014) (claim
by Chinese corporate defendant that it was unfamiliar with U.S. litigation practice was insufficient
to constitute “excusable neglect”); Simon v. Pay Tel Mgmt., Inc., 952 F.2d 1398, at *6–7 (7th Cir.
1992) (finding no “excusable neglect” where a party willfully, albeit through ignorance or
carelessness, abdicates its responsibilities to the court)).)
Plaintiff also points out that Defendant was willful as evidenced by its lack of prompt action
and continued ignorance of this case, despite Plaintiff’s repeated attempts at communication. (Id.
at 19.) Rather than promptly moving to vacate the default entry, Defendant was content with letting
“Plaintiff and the Court expend judicial resources on Plaintiff’s requests to conduct class
For these reasons, Defendant’s default was “clearly willful” and intentional. (Id. at 18.)
Thus, in accordance with Fifth Circuit precedent, this factor alone is dispositive of Defendant’s
motion. (Id. at 18–19 (citing Cooper v. Faith Shipping, 2010 WL 2360668, at *14 (E.D. La. June
9, 2010); Matter of Grabanski, 691 F. App'x 159, 164 (5th Cir. 2017) (“Keeleys’ intentional
decision not to object to the default proceedings was not justified. This finding of willful default
ends the inquiry.”)).) Nevertheless, Plaintiff still address why Defendant’s “meritorious defenses”
have no merit. (Id. at 20–28.)
In conclusion, Plaintiff notes that Defendant made a choice to willfully ignore this case for
almost a year—despite being on actual notice of its default—therefore it should not be allowed to
rely on the general policy in favor of resolving cases on their merits for relief in this case. (Id. at
C. Defendant’s Reply (Doc. 27)
In response, Defendant reiterates that it has shown good cause to set aside the entry of
default because: (1) its failure to respond was not willful, (2) Plaintiff has not been harmed, and
(3) it has demonstrated viable defenses.
As to the first factor, the Court should find that Defendant’s failure to respond to a
“groundless lawsuit was at least understandable and excusable under these circumstances.” (Doc.
27 at 4.) In support of this argument, Defendant cites to Voyles v. Superior Staffing LLC:
In Voyles, the district court found that the defendant’s failure to respond to a lawsuit
was not willful “under the lenient Rule 55(c) standard” though he knew about the
lawsuit, he had in fact corresponded with plaintiff’s counsel prior to the entry of
default and where, as here, the defendant “assumed his retained counsel was
handling all related matters, including the instant case….” Id. Although Mr.
Kottemann is an attorney, he at least initially reasonably relied upon his client,
FHC, to handle this matter.
(Id. (quoting Voyles v. Superior Staffing LLC, 2019 WL 6516649, at *2 (W.D. La. Dec. 3, 2019)).)
Defendant next re-urges that Plaintiff has not been prejudiced as there is no claim that any
evidence has been lost. (Id. at 5.) While Plaintiff “bemoans supposed ‘countless letters, emails and
phone calls from Plaintiff’s counsel,’ and a claimed expenditure of a ‘significant amount of time
and effort litigating this case,’ ” prior to Defendant’s motion, there were only 15 docket entries
(the Complaint, three motions, a status report, the Clerk’s Entry of Default, and two Orders). (Id.)
Defendant further represents that Plaintiff’s counsels “strenuous effort” claims ring hollow. (Id. at
6.) According to Defendant, Plaintiff’s counsel has been found by other courts to be someone who
regularly files “ ‘gotcha’ FDCPA ‘technical violation cases’ like this one all over the country.” (Id.
at 5–6 n.17, n.18 (numerous citations omitted).)
Finally, Defendant argues that it “has made a ‘clear and specific showing ... by [a] definite
recitation of facts that [it] has a valid defense.’ ” (Id. (quoting Jenkens & Gilchrist v. Groia & Co.,
542 F.3d 114, 122 (5th Cir. 2008)).) Therefore, Defendant concludes that its excuse for the delay,
the lack of prejudice to Plaintiff, and the existence of meritorious defenses are sufficient for the
Court to set aside the entry of default under Rule 55(c)’s lenient standard. (Id. at 8.)
A. Applicable Law
According to Rule 55(c) of the Federal Rules of Civil Procedure, a court may set aside an
entry of default for good cause shown. Fed. R. Civ. P. 55(c); Dierschke, 975 F.2d at 183. “The
decision to set aside a default decree lies within the sound discretion of the district court.” U.S. v.
One Parcel of Real Prop., 763 F.2d 181, 183 (5th Cir. 1985) (citation omitted). However, courts
“universally favor trial on the merits.” Dierschke, 975 F.2d at 183 (quoting Bridoux v. Eastern Air
Lines, Inc., 214 F.2d 207, 210 (D.C. Cir. 1954)). In addition, motions to set aside a default are
more readily granted than motions to set aside a default judgment. Id. at 184; One Parcel, 763 F.2d
at 183 (“Although a motion to set aside a default decree under Fed. R. Civ. P. 55(c) is somewhat
analogous to a motion to set aside a judgment under Fed. R. Civ. P. 60(b), the standard for setting
aside a default decree is less rigorous than setting aside a judgment for excusable neglect.”)
In deciding whether a defendant has shown good cause, “courts consider three nonexclusive factors: ‘whether the default was willful, whether setting it aside would prejudice the
adversary, and whether a meritorious defense is presented.’ ” Koerner v. CMR Constr. & Roofing,
LLC, 910 F.3d 221, 225 (5th Cir. 2018) (quoting Lacy, 227 F.3d at 292) (emphasis added); see
also Sindhi v. Raina, 905 F.3d 327, 332 (5th Cir. 2018) (outlining the same factors). Other factors,
such as whether the party acted expeditiously to correct the default, may also be considered.
Effjohn Intern. Cruise Holdings Inc v. A&L Sales, Inc., 346 F.3d 552, 563 (5th Cir. 2003).
However, the Court need not consider all of the factors in reaching a determination. Jenkens &
Gilchrist v. Groia & Co., 542 F.3d 114, 119 (5th Cir. 2008) (quoting Dierschke, 975 F.2d at 183
(finding the factors should be treated in the disjunctive)). And “[t]he ultimate inquiry remains
whether the defendant shows ‘good cause’ to set aside the default.” CJC Holdings, Inc. v. Wright
& Lato, Inc., 979 F.2d 60, 64 (5th Cir. 1992) (citing Dierschke, 975 F.2d at 184).
Pertinent to this case, “[a] finding of willful default ends the inquiry[.]” In re Chinese
Manufactured, 742 F.3d at 594 (quoting Lacy, 227 F.3d at 292); Dierschke, 975 F.2d at 184–85
(“Willful failure alone may constitute sufficient cause for the court to deny [the defendant's]
motion”). A “willfulness” inquiry is whether the neglect is excusable. Effjohn, 346 F.3d at 563
(citing CJC Holdings, 979 F.2d at 64). Excusable neglect is an “ ‘elastic concept’ and is not limited
strictly to omissions caused by circumstances beyond the control of the movant.” Pioneer Inv.
Servs. Co. v. Brunswick Assocs. Ltd. P'ship., 507 U.S. 380, 392 (1993). The term “encompasses
both simple, faultless omissions to act and, more commonly, omissions caused by carelessness.”
Id. at 388.
“The defendant has the burden of showing by a preponderance of the evidence that its
neglect was excusable, rather than willful.” Wooten v. McDonald Transit Assocs., Inc., 788 F.3d
490, 500–01 (5th Cir. 2015) (citation omitted). Thus, when a defendant fails to explain the reason
for its delay, a willful default is presumed. Id. at 501. Where a reason is offered, “perfection of
service is not determinative – the defendant's knowledge of the perfected service, and the
defendant's actions post-service ... play a role in measuring the willfulness of [the] default.”
Jenkens & Gilchrist, 542 F.3d at 123.
“While it appears the Fifth Circuit has not provided clear guidance on what type of conduct
rises to the level of a willful failure to respond, it has provided guideposts for a court to make this
determination.” Welch v. State Farm Mut. Auto. Ins. Co., No. 18-208, 2019 WL 2016537, at *3
(N.D. Miss. May 7, 2019) (motion to set aside default entry). “For example, it is clear that a litigant
willfully defaults when it receives notice of a lawsuit but takes ‘no further action to respond or
stay abreast of the status of the litigation....’ ” Id. (quoting UnitedHealthcare Ins. Co. v. Holley,
724 F. App'x 285, 288 (5th Cir. 2018)). This rule applies even if the defendant erroneously believes
the complaint does not require an answer. Id. (citing Dierschke, 975 F.2d at 184). In contrast, a
defendant does not act willfully when, despite its belief that no answer is required, it takes actions
consistent with an intention to defend or resolve the suit. See Lacy, 227 F.3d at 292–93 (no willful
default where “counsel for [defendant] made repeated contacts with [plaintiff] in an attempt to
resolve the suit” and “made plain its intention not to agree to waiver of service”); see also Jenkens
& Gilchrist, 542 F.3d at 123–24 (“As the record reflects her contemporaneous intent to claim
ownership of the Williamsburg residence, it would be quite strange for [the defendant] to willfully
default when doing so would destroy her interest in the home.”).
After carefully considering the record, counsel’s briefs and supporting documents, the
Court finds that Defendant’s default was willful. Based on the docket entries and Plaintiff’s
counsel’s declaration, it is evident that Defendant had notice of this suit and the default entered
against it and nevertheless chose not to respond. The affidavit proffered by Mr. Kottemann does
nothing to dispel this.
For example, in his affidavit, Mr. Kottemann admits to being served with the Complaint
on June 29, 2019, yet Defendant took no action in response. (Kottemann Aff., Doc. 41-3 at ¶ 5;
see also Docs. 6, 7.) Indeed, Defendant’s failure to answer the Complaint or otherwise respond to
this lawsuit prompted Plaintiff to seek an entry of default against Defendant on August 20, 2019.
Before doing so, Plaintiff’s counsel twice warned Defendant that if it continued to not
respond, then Plaintiff would seek an entry of default against it. (See July email, Doc. 42-2 at 1
(“Mr. Kottemann: Due to your firm's failure to answer, we will be moving forward for a default
shortly. Please feel free to reach out to me if you would like to discuss before hand.”); August
email, Doc. 42-3 at 1 (“Mr. Kotteman: I again called your office today, but have yet to hear back.
We will note in our moving papers that we attempted to reach out to you on July 30th via email
and phone, and today via email and phone, but were ignored.”).) Mr. Kottemann admits to
receiving these emails in his affidavit, yet Defendant did nothing. (Kottemann Aff., Doc. 41-3 at
¶ 9; Doc. 42-4 at 1.)
After default was entered on August 21, 2019, Plaintiff filed a status report with the Court
saying as such and emailed Mr. Kottemann to let him know that default had been entered against
Defendant. (See Zelman Dec., Doc. 42-1 at 2–3; Docs. 9, 10.) Again, Defendant did nothing.
Despite Mr. Kottemann’s actual knowledge of this suit and the default entry, Defendant
took no action in this case until May 8, 2020—almost one year after Defendant was served with
the Complaint and over eight months after default was entered. (Doc. 16.) Nevertheless, Defendant
argues that the Court should excuse this delay because it was not intentional. Defendant contends
that although Mr. Kottemann is an attorney, he at least “initially reasonably relied upon FHC” to
handle this matter. (Doc. 27 at 4.) The Court disagrees.
As Plaintiff correctly contends, Defendant is a law firm and Mr. Kottemann is an attorney
who has been practicing law for over 20 years. (See Doc. 42 at 7, 17.) For Mr. Kottemann to swear
that he “reasonably believed” that FHC was handling this case by directly settling with Plaintiff or
demanding arbitration defies logic. (Kottemann Aff., Doc. 41-3 at ¶¶ 8–9.)
FHC is not a party to this suit. Kottemann Law Firm is the only defendant named in this
action. A simple reading of the Complaint demonstrates that this suit is brought against Defendant
based on Defendant’s alleged violations of the FDCPA. (See Doc. 1.) Additionally, the language
in Plaintiff’s counsel’s July 30, 2019 email makes it clear that the suit is against Defendant, not
FHC. Again, that email states in relevant part: “Mr. Kottemann: Due to your firm's failure to
answer, we will be moving forward for a default shortly….” (July email, Doc. 42-2 at 1 (emphasis
Also, notably absent from Mr. Kottemann’s affidavit and Defendant’s briefing is any
indication that Mr. Kottemann took any steps to keep himself abreast of this litigation. Mr.
Kottemann’s “reasonable belief” that FHC was handling this case either by settling with Plaintiff
or demanding arbitration could have been dispelled by checking the docket. See e.g., James v. City
of Jersey City, 187 F.R.D. 512, 518 (D.N.J. 1999) (“[T]he default was the result of D'Agosta's
culpable conduct. Default was not entered against D'Agosta until almost nine months after his
answer was due. D'Agosta has not presented any evidence that he inquired once into the status of
his case during that time or that he made any effort to ensure that an answer had been filed on his
behalf or that his attorney continued to represent him. D'Agosta's inaction and disregard for this
action constitute culpable conduct”); J&J Sports Prods., Inc. v. Hnos Adame Corp., 2017 WL
728311, at *4 (N.D. Tex. Jan. 23, 2017) (noting that “a party has a duty of diligence to inquire
about the status of a case”).
There is no excuse for this conduct, much less a reasonable one. On this point, Dierschke
is illustrative. There, the Fifth Circuit noted both the defendant and his counsel were served with
the complaint and summons. Dierschke, 975 F.2d at 183 (discussing a motion to set aside a clerk's
entry of default). Further, defendant's counsel testified that he discussed the complaint with the
defendant before the answer was due but nonetheless declined to file an answer. Id. at 184. Thus,
the Fifth Circuit concluded the lower court did not abuse its discretion in declining to set aside the
clerk's entry of default. Id. at 184–85. In re Chinese Manufactured is similar albeit in the defaultjudgment context. There, the corporate defendant was served with the first amended complaint but
waited almost a year later to file an appearance. In re Chinese Manufactured, 742 F.3d at 582–83.
The Fifth Circuit concluded the district court did not abuse its discretion by refusing to vacate the
default judgment. Id. at 595. See also, In re Whelan, 582 B.R. 157, 176–77 (Bankr. E.D. Tex. Feb.
16, 2018) (“In this case, the Defendant elected, at least with regard to this particular adversary
proceeding, to forego any such prompt participation. He was promptly served with the complaint
and summons. He elected not to respond. He was notified that an entry of default had been entered
against him. He intentionally ignored it. He was served with the motion for default judgment. He
did nothing. Yet he now wants to complain that he did not get to participate and bemoans how the
entry of a default judgment against him is fundamentally unfair—though he alone is
responsible….With that background, there is no sound public policy that is promoted by rewarding
the Defendant for his intransigence over a period of 18 months.”); Commerce Bank & Trust
Company v. Ria LLC, 314 F.R.D. 338 (D. Mass. Feb. 3, 2016) (vacating default was unwarranted
when defaulting party was an attorney who did not deny service and knowledge of the suit and
nearly eight months passed between the entry of default and the filing of the motion to vacate);
Porter v. Brancato, 171 F.R.D. 303, 304 (D. Kan. 1997) (defendant's failure to timely answer or
otherwise respond to the plaintiff’s complaint, after receiving actual notice of the complaint,
demonstrated willful and flagrant disregard for the court constituting culpable conduct, and the
default entered would not be set aside); Conetta v. Nat’l Hair Care Ctrs., Inc., 186 F.R.D. 262,
269 (D.R.I. 1999), judgment aff'd, 236 F.3d 67 (1st Cir. 2001) (no good cause shown to vacate
default entry where the defendant was a sophisticated business man who chose to ignore the
lawsuit in bad faith and with no reasonable explanation and waited more than four months after
default entry to even hire a lawyer); Merrill Lynch Mortg. Corp. v. Narayan, 908 F.2d 246, 251253 (7th Cir. 1990) (affirming the district court's refusal to set aside entry of default and entry of
judgment where plaintiff twice threatened to move for default if an answer was not forthcoming).
Like the defaulting parties in the above cases, Defendant in this case admitted to being
served with the Complaint, but it took “no further action to respond or stay abreast of the status of
the litigation....” UnitedHealthcare, 724 F. App'x at 288. Defendant’s actions following its receipt
of the Complaint and the notice of entry of default demonstrate a true dereliction of its “duty of
diligence to inquire about the status of [its] case.” Id. (citing Pryor v. U.S. Postal Service, 769 F.2d
281, 287 (5th Cir. 1985)). The Court does not condone such behavior.
Despite being served with the Complaint in June of 2019 and having knowledge of the
default in August of 2019, Defendant waited over eight months from the entry of that default and
almost an entire year before making its first appearance in this case and moving to set the default
aside. (Doc. 16.) The only excuse it provided for this delay is akin to no excuse at all. Thus, the
record clearly demonstrates that the default was willful and intentional. In accordance with Fifth
Circuit precedent, this Court pretermits a discussion of the other “non-exclusive good cause”
factors and finds Defendant’s willful behavior to be dispositive of the instant motion. In re Chinese
Manufactured, 742 F.3d at 594; Lacy, 227 F.3d at 292.
Further, as the Fifth Circuit has explained, a party who has defaulted must succeed in
setting aside the default entry before they can file motions that go to the merits of the case. New
York Life Ins. Co. v. Brown, 84 F.3d 137, 143 (5th Cir. 1996). As such, the Court denies
Defendant’s motion to compel arbitration, to dismiss for lack of standing, and to dismiss for failure
to state a claim. Defendant’s motion for leave to file an answer and affirmative defenses is likewise
denied. New York Life Ins., 84 F.3d at 143 (“Only if a Rule 55(c) motion is made, and granted,
will Alvin be allowed to file an answer.”); Serv. Janitorial, LLC v. Talbot, No. 8-685, 2009 WL
10677607, at *4 (E.D. Tex. Jan. 22, 2009) (“[T]he effect of the entry of default is that it cuts off
the Defendant's right to appear in the case with respect to liability issues. Because the Defendants
did not appear prior to the Clerk's entry of default, they were not entitled to file substantive motions
unless and until the entry of default was set aside. The court will therefore deny without prejudice
Defendants' motions to dismiss and compel arbitration…”); Twist and Shout Music v. Longneck
Xpress, N.P., 441 F. Supp. 2d 782, 783 (E.D. Tex. 2006); J&J Sports Prods., Inc. v. Pei Chuan
Kuo, No. 7-075, 2007 WL 4116209, at *3 (W.D. Tex. Nov. 15, 2007)); see also Thomas v.
Culpepper, No. 18-814, 2019 WL 6037992, at *3 n.4 (E.D. Tex. July 29, 2019), report and
recommendation adopted, No. 18-814, 2019 WL 4564837 (E.D. Tex. Sept. 20, 2019); Ocwen Loan
Servicing, LLC v. Heiberg, No. 17-690, 2018 WL 5728526, at *2 (E.D. Tex. Sept. 18, 2018), report
and recommendation adopted, No. 17-690, 2019 WL 298210 (E.D. Tex. Jan. 16, 2019); United
States v. Poole, No. 17-0373, 2017 WL 6731718, at *3 (S.D. Ala. Dec. 28, 2017); Great Am. Ins.
Co. v. Goin, No. 15-75, 2015 WL 11121356, at *3 (N.D. Tex. Dec. 16, 2015); Cohen v. Rosenthal,
No. 15-1043, 2015 WL 7722391, at *2 n.2 (D. Conn. Nov. 30, 2015); Mid-Central Ill. Reg'l
Council of Carpenters v. Con-Tech Carpentry LLC, No. 14-3293, 2015 WL 12802605, at *3 (C.D.
Ill. Feb. 9, 2015); HEI Res., Inc. v. Evans, No. 9-124, 2011 WL 13249409, at *1 (S.D. Tex. Jan.
IT IS ORDERED that the Motion to Set Aside Clerk’s Entry of Default and to Compel
Arbitration (Docs. 16, 41) filed by Defendant Kottemann Law Firm is DENIED.
Signed in Baton Rouge, Louisiana, on March 31, 2021.
JUDGE JOHN W. deGRAVELLES
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF LOUISIANA
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