Thomas v. Lighthouse of Oakland et al

Filing 143

ORDER Denying 136 Motion for Default Judgment. Signed by District Judge Victoria A. Roberts. (LVer)

UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTICT OF MICHIGAN
SOUTHERN DIVISION
RANDALL THOMAS,
Plaintiff,

Case No. 12-15494
Honorable Victoria A. Roberts

v.
LIGHTHOUSE OF OAKLAND
COUNTY, et al.,
Defendants.
____________________________/
ORDER DENYING PLAINTIFF’S MOTION
FOR DEFAULT JUDGMENT (DOC. # 136)
On July 27, 2016, the Court entered an order granting Thomas Noonan’s request
to withdraw as counsel for Lighthouse of Oakland County and Lighthouse Community
Development (“Defendants”) and requiring Defendants to have replacement counsel file
an appearance by August 10, 2016. (Doc. # 135). Defendants’ new counsel did not file
an appearance until August 19, 2016. (Docs. # 137, 138). On August 17, 2016, Plaintiff
moved for entry of default judgment based on Defendants’ failure to retain new counsel
and the prohibition against corporations appearing without legal representation. (Doc. #
136). This motion is before the Court.
Plaintiff is correct that corporations must be represented by counsel in federal
court and that default judgment is appropriate where a corporate defendant fails to
obtain counsel. See State Farm Mut. Auto. Ins. Co. v. Edward L. Johnson, P.C., No.
11-13819, 2013 WL 2456006, at *5 (E.D. Mich. June 6, 2013). Here, however, default
judgment under Fed. R. Civ. P. 55(b) is not appropriate, because “it was procedurally
improper for Plaintiff to move for entry of default judgment without first obtaining an
entry of default from the clerk [under Rule 55(a)].” Devlin v. Kalm, 493 Fed. Appx. 678,

685 (6th Cir. 2012) (citing Heard v. Caruso, 351 Fed. Appx. 1, at *15-*16 (6th Cir. 2009)
(holding that because plaintiff “did not first seek entry of a default from the clerk of the
court, it was procedurally improper for [him] to move for entry of a default judgment”);
Shepard Claims Serv., Inc. v. William Darrah & Associates, 796 F.2d 190, 193 (6th Cir.
1986) (“entry of default is just the first procedural step on the road to obtaining a default
judgment”)).
Construing Plaintiff’s pro se motion liberally as a request for an entry of default
under Rule 55(a) does not change the result. Rule 55(a) requires the clerk to enter
default against a defendant that “has failed to plead or otherwise defend, and that failure
is shown by affidavit or otherwise.” Fed. R. Civ. P. 55(a). Here, the Court required
Defendants’ new counsel to appear by August 10, 2016, but they did not appear until
August 19. During those nine days, a clerk’s entry of default may have been
appropriate. However, a default or default judgment is inappropriate at this time;
Defendants now have counsel and they are defending the action.
Furthermore, even if there were an entry of default under Rule 55(a), the Court
would set it aside for “good cause” under Rule 55(c), applying the three-factor test set
forth in United Coin Meter Co. v. Seaboard Coastline Railroad, 705 F.2d 839, 845 (6th
Cir. 1983). In determining whether to set aside an entry of default, the Court must
consider: (1) whether the plaintiff will be prejudiced; (2) whether the defendant has a
meritorious defense; and (3) whether culpable conduct of the defendant led to the
default. Id.; Devlin, 493 Fed. Appx. at 685. Conduct is culpable where it displays
“either an intent to thwart judicial proceedings or a reckless disregard for the effect of its
conduct on those proceedings.” Shepard Claims Serv., 796 F.2d at 194.

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Here, each factor would weigh in favor of setting aside an entry of default.
Defendants’ nine-day delay in obtaining new counsel did not prejudice Plaintiff, because
they are still prepared to proceed to trial on December 5, 2016, as scheduled. (See
Doc. #141, PgID 1937). Defendants have meritorious defenses. And last, the delay
was not due to Defendants’ culpable conduct; replacement counsel was necessary
based on prior counsel’s unexpected illness – an exceptional circumstance outside
Defendants’ control – and new counsel did not appear by the August 10 deadline due to
a miscommunication with prior counsel. (See Doc. #141-3, PgID 1952). This is far from
conduct displaying either an intent to thwart judicial proceedings or reckless disregard
for the effect on proceedings. See Shepard Claims Serv., 796 F.2d at 195 (“A default
judgment deprives the client of his day in court, and should not be used as a vehicle for
disciplining attorneys.”). Default and/or default judgment is inappropriate.
Accordingly, the Court DENIES Plaintiff’s motion for entry of default judgment
(Doc. # 136).
The Court will issue a separate Scheduling Order and Order Regarding Joint
Final Pretrial Order.
IT IS ORDERED.
S/Victoria A. Roberts
Victoria A. Roberts
United States District Judge
Dated: October 6, 2016
The undersigned certifies that a
copy of this document was served on the
attorneys of record and Randall Thomas by
electronic means or U.S. Mail on October 6,
2016.
s/Linda Vertriest
Deputy Clerk

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