Federal Insurance Company v. Fairbotham
ORDER Denying 20 Motion for Default Judgment. Signed by District Judge Thomas L. Ludington. (KWin)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
FEDERAL INSURANCE COMPANY,
Case No. 16-cv-11390
Honorable Thomas L. Ludington
ORDER DENYING MOTION FOR DEFAULT JUDGMENT
On April 18, 2016, Plaintiff Federal Insurance Company initiated the above-captioned
action against Defendant Penny Fairbotham by filing its complaint. ECF No. 1. Alleging that
Defendant Fairbotham pled no contest to embezzling $174,690.00 in insurance proceeds from its
subrogee, Jim Wernig, Inc., Plaintiff asserts that Fairbotham is liable to it for the wrongful
conversion of the funds. Plaintiff also asserts that it is entitled to treble damages and attorneys’
fees pursuant to M.C.L. § 600.2919(a). After Defendant Fairbotham filed an answer on May 13,
2016 the matter was referred to Magistrate Judge Patricia T. Morris for pretrial management. See
ECF No. 4. On November 1, 2016, Plaintiff Federal Insurance Company filed a motion for
summary judgment. ECF No. 10. Defendant filed a response on November 18, 2016. ECF No.
12. After the motion was fully briefed, on March 17, 2017 the Magistrate Judge issued a report
recommending that Plaintiff’s motion for summary judgment be denied. ECF No. 14. The Court
entered an order adopting the report and recommendation on April 10, 2017. ECF No. 15. A
status conference was held on May 24, 2017. Defendant did not attend the conference.
Plaintiff requested entry of default pursuant to Federal Rule of Civil Procedure 55(a) on
the grounds that Defendant failed to attend the status conference or inform Plaintiff or the Court
as to the reasons for her absence. ECF No. 18. The Clerk denied the request for entry of default
on the ground that Defendant responded to the motion for summary judgment. ECF No. 19.
Plaintiff then filed the instant Motion for Default Judgment for the same reasons asserted in the
request for entry of default.
Rule 55(a) sets forth the standard for entry of default by the court clerk: “[w]hen a party
against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend,
and that failure is shown by affidavit or otherwise, the clerk must enter the party’s default.” Fed.
R. Civ. P. 55(a). After entry of default, a party may move for default judgment under rule 55(b).
Ford Motor Co. v. Cross, 441 F. Supp. 2d 837, 846 (E.D. Mich. 2006). A condition precedent to
default judgment is entry of default. Hudson v. North Carolina, 158 F.R.D. 78, 80 (E.D.N.C.
1994) (citing Fed. R. Civ. P. 55).
If there is no entry of default by the clerk, a party may move for (1) an order to the clerk
to enter the default; and (2) entry of default judgment. Wolf Lake Terminals, Inc. v. Mutual
Marine Ins. Co., 433 F. Supp. 2d 933, 941 (N.D. Ind. 2005). “Although Rule 55(a) refers to the
entry of default by the clerk, it is well-established that a default also may be entered by the
court.” Breuer Electric Mfg. Co. v. Toronado Sys. of Am., Inc., 687 F.2d 182, 185 (7th Cir.
Under Rule 16(f), if a party “fails to obey a scheduling or pretrial order, or if no
appearance is made on behalf of a party at a scheduling or pretrial conference,” the court may, in
its discretion, impose various sanctions against the disobedient party, including a default
judgment. Fed. R. Civ. P. 16(f); Flynn v. Thibodeaux Masonry, Inc., 311 F. Supp. 2d, 36 (D.D.C
2004). Courts have granted default judgment as a sanction against a party for failing to comply
with a court order or appear at a hearing. E.g., Eagle Assocs. V. Bank of Montreal, 926 F.2d
1305, 1310 (2d Cir. 1991). However, default judgment as a sanction is most appropriate where
there is a pattern of non-compliance with court orders. Secs. & Exchange Comm’n v. Hollywood
Trenz, Inc., 202 F.R.D. 3, 7 (D.D.C. 2001).
As a general matter, default judgment is disfavored because of the “strong preference for
trials on the merits.” Shepard Claims Serv., Inc. v. William Darah & Assoc., 796 F.2d 190, 193
(6th Cir. 1986). The Sixth Circuit cautions: “Judgment by default is a drastic step which should
be resorted to only in the most extreme cases.” United Coin Meter Co., Inc. v. Seaboard
Coastline RR., 705 F.2d 839, 845 (6th Cir. 1983); see Russell v. City of Farmington Hills, 34 F.
App’x 196, 198 (6th Cir. 2002) (enumerating factors a court should consider in evaluating
motion for default judgment).
Here, the clerk denied entry of default. ECF No. 19. The Court nonetheless has discretion
to direct entry of default and grant a default judgment. Breuer Electric, 687 F.2d at 185 (7th Cir.
1982). Plaintiff’s Motion does not acknowledge the clerk’s denial of entry of default. Plaintiff’s
motion does not challenge the clerk’s reason for denying entry of default. Rather, Plaintiff
reasserts the fact that Defendant failed to appear at the status conference. Mot. Default. J. at 2,
ECF No. 20. On this basis Plaintiff deduces that Defendant “has decided not to participate in any
further proceedings in this litigation.” Id.
Defendant has not “failed to plead or otherwise defend” under rule 55(a). Defendant filed
an answer and responded to Plaintiff’s summary judgment motion. See ECF Nos. 3, 12. Thus, the
Clerk properly denied entry of default. Plaintiff does not support its assertion that failure to
attend a status conference is a sufficient basis upon which to enter default or default judgment.
Plaintiff appears to suggest that it is entitled to default judgment as a matter of course, such as
where a party has failed to appear under rule 55(b)(1). However, default judgment is only
available here as a discretionary sanction under rule 16(f). See Fed. R. Civ. P. 16(f), 55(a);
Flynn, 311 F. Supp. 2d at 36. Entry of an adverse judgment is a greater sanction than necessary
to address a party’s failure to appear at a status conference.
It is worth noting that Defendant’s failure to attend the conference is not excusable.
Defendant asserts that she failed to appear at the status conference because she believed the case
was dismissed by this Court’s order denying Plaintiff’s motion for summary judgment. Resp. at
1, ECF No. 23. Denial of Plaintiff’s motion for summary judgment means only that there is a
factual dispute as to “whether Defendant embezzled the amount alleged and that Plaintiff is
entitled to recoup any money embezzled from JWI . . .” Rep. & Rec. at 12, ECF No. 14. This
does not constitute a dismissal, nor does it constitute a judgment for Defendant. Although
Defendant was clearly mistaken as to the meaning of the Court’s April 10 Order, it is not entirely
unreasonable for a pro per defendant to believe that denial of Plaintiff’s motion for summary
judgment constituted a dismissal.
Defendant’s assertion that she was not aware of the status conference is without merit.
Resp. at 1. The Court’s April 10 order denying summary judgment clearly indicated that a status
conference was schedule for May 24. Defendant was served with the Order at her address of
record. If this address is no longer correct, it is the Defendant’s responsibility to provide the
correct address. Furthermore, Defendant was apparently aware of the Order, which she believed
dismissed the case. Resp. at 1. Both the text of the Order itself and the text of CM-ECF docket
entry number 15 state that a status conference was scheduled for May 24. It is unclear how
Defendant could have possibly been aware of the denial of summary judgment but unaware of
the status conference.
While Plaintiff might be entitled to a lesser remedy for Defendant’s failure to appear at
the status conference, Plaintiff has not yet sought a lesser remedy than entry of a default
judgment. As Defendant is proceeding pro per, it is worth noting that there are two court dates
rapidly approaching, both of which require her attendance: Final Pretrial Conference Scheduled
for October 24, 2017 at 3:00pm, and Bench Trial Scheduled for November 7, 2017 at 8:30am.
It also bears repeating that rule 16(f) authorizes a variety of sanctions for failure to appear at a
conference or hearing including attorney’s fees and default judgment. Fed. R. Civ. P. 16(f).
Accordingly, it is ORDERED that Plaintiff’s Motion for Default Judgment, ECF No. 20,
s/Thomas L. Ludington
THOMAS L. LUDINGTON
United States District Judge
Dated: September 20, 2017
PROOF OF SERVICE
The undersigned certifies that a copy of the foregoing order was served
upon each attorney or party of record herein by electronic means or first
class U.S. mail on September 20, 2017.
KELLY WINSLOW, Case Manager
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