Cave v. Sentry Credit, Inc.

Filing 12

ORDER Granting 9 Motion to Set Aside 7 Clerks Entry of Default and Cancelling May 7, 2013 Hearing . Signed by District Judge Gershwin A. Drain. (Bankston, T)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
GARY CAVE,
on behalf of himself
and all others similarly situated,
Plaintiff,

Case No. 13-10838
HON. GERSHWIN A. DRAIN

vs.

SENTRY CREDIT, INC.,
Defendant.
__________________________________/
ORDER GRANTING DEFENDANT’S MOTION TO SET ASIDE CLERK’S ENTRY OF
DEFAULT [#9] AND CANCELLING MAY 7, 2013 HEARING

I.

INTRODUCTION
Presently before the court is Defendant’s Motion to Set Aside Clerk’s Entry of

Default. Upon review of the Complaint, Motion to Set Aside Clerk’s Entry of Default, and
Response the Court concludes that oral argument will not aid in the resolution of this
matter. Accordingly, the Court will resolve the pending Motion on the briefs and cancels
the hearing scheduled for May 7, 2013. See E.D. Mich. L.R. 7.1(f)(2). For the reasons that
follow Defendant’s Motion is GRANTED.

II.

PROCEDURAL AND FACTUAL HISTORY
Plaintiff filed the Complaint on March 1, 2013, alleging that Defendant violated the

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Fair Debt Collection Practices Act. Defendant is a foreign corporation with its principal
place of business in Washington. The resident agent of Defendant was served with
Plaintiff’s Summons and Complaint on March 1, 2013. Though Defendant’s Answer was
due on March 22, 2013, Defendant failed to respond at that time. Plaintiff requested
Clerk’s Entry of Default on March 27, 2013, which the Clerk granted on March 29, 2013.
After receiving notice of the case on April 3, 2013, Defendant’s counsel entered a Notice
of Appearance and filed the current motion on April 4, 2013. Plaintiff responded on April
15, arguing that since there is no meritorious defense the motion should be denied.
III.

LAW AND ANALYSIS
1. Standard of Review
Federal Rule of Civil Procedure 55(c) allows for an entry of default to be set aside

for good cause. FED R. CIV. P. 55(c). “In determining whether ‘good cause’ exists, courts
consider: (1) whether culpable conduct of the defendant led to the default; (2) whether the
defendant has a meritorious defense; and (3) whether the plaintiff will be prejudiced.”
Mertik Maxitrol Gmbh & Co. Kg v. Honeywell Technologies Sarl, 10-12257, 2011 WL
3714634 (E.D. Mich. Aug. 24, 2011) (citing United States v. $22,050.00 U.S. Currency, 595
F.3d 318, 324 (6th Cir. 2010). Though all three factors are considered, when defendant
has presented a meritorious defense and plaintiff fails to demonstrate prejudice, it is an
abuse of discretion to deny a Rule 55(c) motion absent culpable conduct. See Kaufman
Payton & Chapa, P.C. v. Bilanzich, 11-15563, 2013 WL 1278192, *2 (E.D. Mich. Mar. 27,
2013).
Examining these factors, this Court finds that Defendant’s motion should be granted.

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First, there is no “culpable conduct” by Defendant. The delay appears to be accidental
rather than an attempt to “thwart judicial proceedings” or display a “reckless disregard for
the effect of its conduct on those proceedings.” Id. Once defense counsel learned of the
suit he promptly filed a notice of appearance and contacted Plaintiff’s counsel about
resolution of the entry of default.

While the fact that Defendant is an out-of-state

corporation does not excuse their tardy answer, the transfer from the resident agent to
Defendant at least provides a reason for their delayed response.
As to the second factor, Defendant asserts that it has a meritorious defense, yet no
detail is offered about what that defense is. Third, Plaintiff has made no attempt to
demonstrate prejudice suffered by Defendant’s delay in responding, nor does this Court
find any. Defendant was only two weeks late in responding to the Complaint and “[w]here
a defendant files an entry of appearance and an answer shortly after learning that default
had been entered, the delay is not lengthy and there is no pattern of disregard for court
orders or rules.” Id.
Even though Defendant has failed to provide detail about its meritorious defense,
the other two factors weigh heavily in Defendant’s favor. The delay in responding was not
purposeful and Plaintiff suffered no prejudice from it. As such, this Court finds that the
entry of default should be set aside.
IV.

CONCLUSION
For the foregoing reasons, Defendant’s Motion to Set Aside Clerk’s Entry of Default

[#9] is GRANTED and the CLERK’S ENTRY OF DEFAULT [#7] is SET ASIDE.
Defendant shall respond to Plaintiff’s Complaint no later than May 15, 2013.
SO ORDERED.
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Dated: May 1, 2013
S/Gershwin A. Drain
GERSHWIN A. DRAIN
UNITED STATES DISTRICT JUDGE

CERTIFICATE OF SERVICE
Copies of this Order were served upon attorneys of record on
May 1, 2013, by electronic and/or ordinary mail.
S/Tanya Bankston
Deputy Clerk

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