Massie v. Gulf Coast Pre-Stress, Inc.

Filing 18

ORDER granting 10 Motion to Set Aside Judgment. This lawsuit is reopened as a pending case on the Court's docket. Gulf Coast Pre-Stress, Inc's answer is due within 20 days of the date of this Order. Signed by Chief District Judge Louis Guirola, Jr. on 11/10/14. (RLW)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF MISSISSIPPI
SOUTHERN DIVISION
JOSEPH A. MASSIE

PLAINTIFF

v.

CAUSE NO. 1:13CV364-LG-JMR

GULF COAST PRE-STRESS, INC.

DEFENDANT

ORDER GRANTING MOTION TO SET ASIDE DEFAULT JUDGMENT
BEFORE THE COURT is the Motion [10] to Set Aside Default Judgment
filed by the defendant, Gulf Coast Pre-Stress, Inc. The defendant seeks to set aside
the default judgment entered against it because it had no notice it had been sued
until it was notified that default judgment had entered. The matter has been fully
briefed, and after due consideration, the Court finds that the defendant has shown
good cause for its default. Accordingly, the Default Judgment will be set aside and
this case will resume on the Court’s docket.
FACTS AND PROCEDURAL HISTORY
Massie alleged in his Complaint that he was a seaman under the Jones Act,
employed by Gulf Coast Pre-Stress, Inc. as a captain and member of the crew of the
vessel VELMA C. (Compl. 2, ECF No. 1). He alleges he was injured while
performing work on the VELMA C that was not his regularly scheduled duty, but
necessary because the vessel was undermanned. Massie sued Gulf Coast PreStress, Inc. as the owner, operator and/or pro hac vice of the vessel, for negligence,
unseaworthiness, and maintenance and cure.
When Gulf Coast Pre-Stress, Inc. did not answer the lawsuit, Massie filed a

motion for default judgment. (ECF No. 6). The Court conducted a hearing one
month later, at which Massie testified regarding his damages. (See Minute Entry
Feb. 18, 2014). At the conclusion of the hearing, the Court entered a default
judgment awarding Massie his claimed damages of $750,000, plus costs and postjudgment interest. (Judgment Feb. 18, 2014, ECF No. 8).
About two months after entry of the default judgment, the defendant moved
to have the default judgment set aside. It asserts that it was not aware it had been
sued until its Human Resources Director, Noel Monaghan, received a certified letter
regarding the default judgment from Massie’s counsel. In the defendant’s
investigation of the matter, it discovered that its agent for service received the
summons and complaint. The agent mailed the documents to Gulf Coast Pre-Stress
Partners, LTD (“Partners”) by certified mail. The certified mail was signed for by
the mail clerk for Partners, who provided an affidavit stating that she is unable to
account for what happened to the certified mail next, although her usual practices
would have led her to deliver it to Monaghan. (Def. Ex. 4, ECF No. 10-1 at 106).
Monaghan has no recollection of receiving the documents. (Def. Ex. 1, ECF No. 10-1
at 3). Thus, Partners received the summons and complaint, but through
inadvertence, did not respond.
DISCUSSION
“The court may set aside an entry of default for good cause, and it may set
aside a default judgment under Rule 60(b).” Fed. R. Civ. P. 55(c). Rule 60(b)(1)
provides that a court may relieve a party from a judgment for “mistake,
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inadvertence, surprise, or excusable neglect.” Fed. R. Civ. P. 60(b)(1). Courts
consider three factors when determining whether to set aside a default judgment
under Rule 60(b)(1): “whether the default was willful, whether setting it aside
would prejudice the adversary, and whether a meritorious defense is presented.”
Jenkens & Gilchrist v. Groia & Co., 542 F.3d 114, 119 (5th Cir. 2008). “Courts may
also consider whether the public interest was implicated, whether there was
significant financial loss to the defendant, and whether the defendant acted
expeditiously to correct the default.” Id. The Fifth Circuit has explained:
In conducting this analysis, “federal courts should not be agnostic with
respect to the entry of default judgments, which are generally
disfavored in the law.” Lacy v. Sitel Corp., 227 F.3d 290, 292 (5th Cir.
2000). . . . “Rule 60(b) [should be] applied most liberally to judgments
of default, since trial on the merits is to be favored over such a
truncated proceeding. Unless it appears that no injustice results from
the default, relief should be granted.” In re OCA, Inc., 551 F.3d 359,
370-71 (5th Cir. 2008). . . .
Scott v. Carpanzano, 556 F. App’x 288, 294 (5th Cir. 2014). Unless the plaintiff has
demonstrated prejudice, any doubt in considering a motion to set aside a default
judgment should generally be resolved in favor of the defendant so that a trial on
the merits can be held. Jenkens, 542 F.3d at 123.
The defendant argues that it can establish that its failure to answer the
lawsuit was the result of an inadvertent oversight, and not willful. The defendant
also contends that it has a meritorious, multi-prong defense, and that Massie will
suffer no prejudice if he is compelled to prosecute his case against the defendant.
Massie concentrates on the first element, arguing that the defendant’s
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admitted negligence in failing to answer the lawsuit does not justify setting aside
the default judgment. Massie asserts that the Court should not reach the issues of
whether the defendant can present a meritorious defense or Massie will be
prejudiced if the default judgment is set aside, because the defendant’s neglect is
not excusable.
As Massie notes, the Fifth Circuit has found mail routing failures such as
this one to be insufficient to constitute excusable neglect. See Rogers v. Hartford
Life & Acc. Ins. Co., 167 F.3d 933, 939 (5th Cir. 1999). The Fifth Circuit holds that
defendants have a responsibility to ensure that process has in fact reached its
destination. Id.; see also Levitt-Stein v. Citigroup, Inc., 284 F. App’x 114, 116 (5th
Cir. 2008). However, contributing to the Fifth Circuit’s decisions was a fact not in
evidence in this case - officials of the defendants corporations had been put on notice
that process was forthcoming. Rogers, 167 F.3d at 939 (Senior Claims Examiner
notified that suit papers were to be sent to her immediately); Levitt-Stein, 284 F.
App’x at 116 (Senior Counsel was put on notice of the threatened suit). There is no
indication in this case that the defendant or Partners was informed that Massie had
filed a lawsuit or that they should expect to be served with process. The Court finds
that under these circumstances, defendant’s default was the result of excusable
neglect.
The defendant also has alleged that it has a meritorious, multi-prong
defense. Specifically, the defendant is the general partner of Partners, and it is
Partners that employed plaintiff Massie as a tug boat captain. Therefore the
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defendant cannot be liable for Massie’s claims. Defendant further claims that it
was Massie’s own negligence and violation of work rules that resulted in his
injuries, not the condition of the vessel or its crew. This showing is sufficient to
establish the meritorious defense element.
Finally, Massie has made no attempt to show that he will be prejudiced if the
default judgment is set aside. The Fifth Circuit has consistently held that a
plaintiff has not suffered sufficient prejudice to warrant upholding a default
judgment when setting it aside does “no harm to plaintiff except to require it to
prove its case.” Lacy v. Sitel Corp., 227 F.3d 290, 293 (5th Cir. 2000) (quoting Gen.
Tel. Corp. v. Gen. Tel. Answering Serv., 277 F.2d 919, 921 (5th Cir. 1960)). To
maintain a default judgment, the plaintiff must show that setting it aside will
result in “loss of evidence, increased difficulties in discovery, or greater
opportunities for fraud and collusion.” Scott, 556 F. App’x at 298 (quoting Lacy, 227
F.3d at 293). There is no such showing in this case. Accordingly, the Court finds
that the default judgment entered against defendant Gulf Coast Pre-Stress, Inc.,
should be set aside.
IT IS THEREFORE ORDERED AND ADJUDGED that the Motion to Set
Aside Default Judgment [10] filed by the defendant, Gulf Coast Pre-Stress, Inc., is
GRANTED. The Default Judgment [8] entered on February 18, 2014, is hereby set
aside, and this lawsuit is reopened as a pending case on the Court’s docket.
IT IS, FURTHER, ORDERED AND ADJUDGED that Gulf Coast PreStress, Inc.’s answer to the Complaint [1] is due within twenty days of the date of
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this Order.
SO ORDERED AND ADJUDGED this the 10th day of November, 2014.

s/

Louis Guirola, Jr.

LOUIS GUIROLA, JR.
CHIEF U.S. DISTRICT JUDGE

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