State Farm Fire & Casualty Company v. Bridging Partners Corporation et al

Filing 30

OPINION and ORDER Granting Defendant Bridging Partners Corporation's 25 Motion to Set Aside Judgment. Signed by District Judge Linda V. Parker. (RLou)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
STATE FARM FIRE AND CASUALTY
COMPANY, a subrogee and successor in
interest of Plaintiff’s insured, SCOTT A.
EDGAR,
Plaintiff,
Civil Case No. 17-10362
Honorable Linda V. Parker

v.
BRIDGING PARTNERS CORPORATION,
HOMEWERKS WOLDWIDE, LLC,
BAI MIN ENTERPRISE, AND HOME
DEPOT U.S.A., INC.,

Defendants.
_________________________________________/
OPINION AND ORDER GRANTING DEFENDANT BRIDGING
PARTNERS CORPORATION’S MOTION TO SET ASIDE DEFAULT
JUDGMENT [ECF NO. 25]
On September 23, 2016, Plaintiff State Farm Fire & Casualty Company
(“Plaintiff” or “State Farm”) commenced this action in state court against
Defendants Homewerks Worldwide, LLC (“Homewerks”), Home Depot U.S.A.,
Inc. (“Home Depot”), Bridging Partners Corporation (“Bridging Partners”), and
Bai Min Enterprise (“Bai Min”) (collectively, Defendants). On February 3, 2017,
Defendant Homewerks removed this action to federal court on the basis of
diversity jurisdiction. (ECF No. 1 at Pg ID 7.)

Presently before the Court are two motions: (1) Plaintiff’s motion for default
judgment as to Bridging Partners Corporation (ECF No. 22) and (2) Bridging
Partners’ motion to set aside entry of default judgment (ECF No. 25). Bridging
Partners filed a response brief to Plaintiff’s motion for entry of the default
judgment. (ECF No. 28). Plaintiff, however, did not file a response brief to
Bridging Partners’ motion to set aside the default judgment. The Court does not
believe that oral argument will aid in its disposition of the motion; therefore, it is
dispensing with oral argument pursuant to Eastern District of Michigan Local Rule
7.1(f). For the reasons that follow, the Court is granting Bridging Partners’ motion
to set aside entry of default judgment and denying as moot Plaintiff’s motion for
default judgment.
I.

Background
This case arises from substantial water damage at a property insured by

Plaintiff. (ECF No. 22 at Pg ID 155.) The property, located at 7213 Lobdell Road,
Linden, Michigan, suffered water damage throughout the home as a result of a
water supply line that was “manufactured, designed, constructed, developed,
inspected, tested, assembled and/or distributed by” Defendant Bridging Partners.
(Id.) On September 23, 2016, Plaintiff filed a complaint seeking a money
judgment against Defendants, including Bridging Partners for an alleged breach of
duties to Plaintiff’s insured. (Id. at Pg ID 156.)
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Plaintiff alleges that Bridging Partners was properly served by personal
service on January 5, 2017. (Id.) In support, Plaintiff provides an affidavit of
service by Wei Chi Wu, a process server. (Id. at Pg ID 193.) The affidavit states
he served a Ms. Sheng Shi in Taipei, Taiwan. (Id.) A witness statement was
attached to the proof of service, where two witnesses attested that they witnessed
Wei Chi Wu signing the proof of service. (Id. at Pg ID 194.) The witness
statement was dated January 11, 2017. (Id.)
Plaintiff then filed a motion for entry of default against Bridging Partners for
failure to answer the complaint. A clerk’s entry of default was filed on April 21,
2017. (ECF No. 25-3 at Pg ID 234.)
II.

Legal Standard
Federal Rule of Civil Procedure 55(c) provides that a court may set aside an

entry of default judgment for “good cause.” In determining whether “good cause”
exists, courts consider whether: (1) the plaintiff will be prejudiced; (2) the
defendant has a meritorious defense; and (3) culpable conduct of the defendant led
to the default. United States v. $22,050.00 U.S. Currency, 595 F.3d 318, 324 (6th
Cir. 2010) (citing Waifersong, Ltd. v. Classic Music Vending, 976 F.2d 290, 232
(6th Cir. 1992)). Courts are to employ a “lenient standard” when evaluating a
request to set aside a default that has not yet ripened into a judgment. Shepard
Claims Serv., Inc. v. William Darrah & Assocs., 796 F.2d 190, 193 (6th Cir. 1986).
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“[W]hen the first two factors militate in favor of setting aside the entry, it is an
abuse of discretion for a district court to deny a Rule 55(c) motion in the absence
of a willful failure of the moving party to appear and plead.” Id. at 194. Federal
courts favor trials on the merits; therefore, doubts should be resolved in favor of
setting aside a default. United Coin Meter Co. v. Seaboard Coastline R.R., 705
F.2d 839, 846 (6th Cir. 1983).
Due process requires proper service of process for a court to have
jurisdiction to adjudicate the rights of the parties.” O.J. Distrib., Inc. v. Hornell
Brewing Co., 340 F.3d 345, 353 (6th Cir. 2003) (citing Amen v. City of Dearborn,
532 F.2d 554, 557 (6th Cir. 1976)). “Therefore, if service of process was not
proper, the court must set aside an entry of default.” Id.; see also Omni Capital
Int’l, Ltd. v. Rudolf Wolff & Co., Ltd., 484 U.S. 97, 104 (1987) (“Before a federal
court may exercise personal jurisdiction over a defendant, the procedural
requirement of service of summons must be satisfied.”).
Federal Rule of Civil Procedure 4(h) provides that a foreign corporation
must be served either in a judicial district of the United States or “at a place not
within any judicial district of the United States, in any manner prescribed by Rule
4(f) for serving an individual, except personal delivery under (f)(2)(C)(i).” Rule
4(f) incorporates the following methods of service on individuals in foreign
countries:
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(1) by an internationally agreed means of service that is reasonably
calculated to give notice, such as those authorized by the Hague
Convention on the Service Abroad of Judicial and Extrajudicial
Documents;
(2) if there is no internationally agreed means, or if an international
agreement allows but does not specify other means, by a method that
is reasonably calculated to give notice:
(A) as prescribed by the foreign country’s law for service in
that country in an action in its courts of general jurisdiction;
(B) as the foreign authority directs in response to a letter
rogatory or letter of request; or
(C) unless prohibited by the foreign country’s law, by:
…
(ii) using any form of mail that the clerk addresses and
sends to the individual and that requires a signed receipt
In other words, a foreign corporation may be served based on an international
treaty agreed upon by the country the foreign corporation is based in; in a manner
prescribed by the law of the destination state; or by personal delivery or any form
of mail addressed by the clerk of the court and requiring a signed receipt, unless
prohibited by the foreign country’s law.
III.

Applicable Law & Analysis
The Court first considers whether plaintiff will be prejudiced by setting aside

the default judgment. Because Plaintiff failed to file a response brief to the motion
to set aside the entry of default judgment, there is no evidence of prejudice.

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The second factor the court must consider is whether the defendant has a
meritorious defense. $22,050.00 U.S. Currency, 595 F.3d at 324. Here, Bridging
Partners alleges they were not properly served. (ECF No. 25 at Pg ID 208.)
Further, it is unclear that Plaintiff properly served Bridging Partners. The affidavit
signed by Wei Chu Wu does not state whether the alleged method of service
complies with any international agreement, or Taiwan’s laws regarding process.
The witnesses to Wei Chu Wu’s statement attested to witnessing him sign the
affidavit six days after the alleged service of process. These witnesses did not see
the service of the summons and complaint. Defendant also states they did not have
actual knowledge of the suit until the entry of default judgment. (ECF No. 25 at
Pg ID 208.)
Turning to the third factor, there is no evidence of culpable conduct by
Bridging Partners that led to the default. $22,050.00 U.S. Currency, 595 F.3d at
324.
For the reasons discussed above, the Court finds that good cause exists to set
aside the entry of default judgment.
Accordingly,
IT IS ORDERED that Plaintiff’s motion for default judgment against
Bridging Partners (ECF No. 22) is DENIED;

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IT IS FURTHER ORDERED that Bridging Partners’ motion to set aside
entry of default judgment (ECF No. 25) is GRANTED;
IT IS FURTHER ORDERED that the entry of default against Bridging
Partners is SET ASIDE.
s/ Linda V. Parker
LINDA V. PARKER
U.S. DISTRICT JUDGE
Dated: October 11, 2017
I hereby certify that a copy of the foregoing document was mailed to counsel of
record and/or pro se parties on this date, October 11, 2017, by electronic and/or
U.S. First Class mail.
s/ Richard Loury
Case Manager

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