Tyson v. Quality Homes of McComb, Inc. et al
Filing
92
ORDER denying 87 Motion to Set Aside Default; denying 88 Motion to Set Aside Default. Signed by Honorable David C. Bramlette, III on June 16, 2015. (lda)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF MISSISSIPPI
WESTERN DIVISION
SAMUEL TYSON
PLAINTIFF
VS.
CIVIL ACTION NO: 3:13-cv-887-DCB-MTP
QUALITY HOMES OF MCCOMB, INC., FRESH START
TRANSPORT, INC., AND CAPPAERT MANUFACTURED
HOUSING, INC.
DEFENDANT
ORDER DENYING MOTION TO SET ASIDE DEFAULT JUDGMENT
This cause is before the Court on the motion of Defendants,
Quality Homes of McComb, Inc. and Fresh Start Transport, Inc., to
set aside default judgment [docket entry nos. 87,88]. Having
carefully
considered
the
motions,
the
responses
thereto,
all
applicable law, and being otherwise fully advised in the premises,
the Court orders as follows:
I. Facts and Procedural Background
On or about June 26, 2013, Plaintiff, Samuel Tyson, filed a
complaint alleging that Defendants delivered the wrong mobile home
to his property, and that the mobile home was damaged both due to
manufacturer’s defects and those that arose during its delivery.
Summons was issued to Quality Homes of McComb, Inc., (“Quality
Homes”) Fresh Start Transport, Inc., (“Fresh Start”) and Cappaert
1
Manufactured Housing, Inc., (“Cappaert”) on September 25, 20131.
Tyson personally served process on Robert A. Yawn, the registered
agent for both Fresh Start and Quality Homes, on October 3, 2013,
in a Burger King parking lot in Hammond, Louisiana. Both Fresh
Start and Quality Homes failed to answer the Complaint within the
twenty-one days required by Federal Rule of Civil Procedure 12(a).
An entry of default was made as to Fresh Start and Quality
Homes on September 14, 2014. See Clerk’s Entry of Default, ECF No.
49. Tyson moved for default judgment on October 7, 2014. On
November 24, 2014, Tyson’s motions for default judgment
were
granted. See Order, ECF No. 71. Quality Homes filed an answer to
Tyson’s complaint on January 3, 2015. See Answer, ECF 77. A hearing
was held on February 3, 2015 where evidence regarding damages and
issues pertaining to the default judgment were presented. On March
5, 2015 Defendants moved to set aside default judgment pursuant to
the Rule 55(c)2 “good cause” provision and the “excusable neglect”
exception pursuant to Rule 60(b).
II. Analysis
A. Rule 55(c)
1. Parties’ Arguments
The Defendants’ argument relies on: (1) the general disfavor
1
Cappaert answered the Complaint on November 4, 2013 and
settled separately. See Agreed Order, ECF No. 85.
2
All references in this opinion are to the Federal Rules
of Civil Procedure unless otherwise noted.
2
of default judgments and the preference to settle disputes by trial
on the merits; (2) that the default was not due to willful behavior
on the part of Quality Homes and Fresh Start, noting that both
defendants “diligently sought counsel after being served” Mot. Set
Aside Default J. ¶ 20; (3) that no prejudice will be placed on
Tyson
by
setting
aside
the
default
judgment;
and
(4)
that
Defendants can present a meritorious defense.
Conversely, Tyson denies that Defendants are entitled to any
relief whatsoever. Resp. ¶ 27. Tyson argues that Defendants’
default should not be set aside because their default is considered
willful.
2. Standard
“The court may set aside an entry of default for good cause.
. . .” Fed. R. Civ. P. 55(c). The Fifth Circuit Court of Appeals
has identified three factors to consider in determining whether a
default judgment should be set aside: (1) “whether the defendant
was willful”; (2) “whether setting it aside would prejudice the
adversary”; and (3) “whether a meritorious defense is presented.”
Murphy v. Simpson Dura-Vent Co., Inc., No. 5:07cv201, 2009 WL
458609, at *1 (S.D. Miss. Feb. 23, 2009) (quoting Lacy v. Sitel
Corp., 227 F.3d 290, 292 (5th Cir. 2000)).
“Being mindful that
default judgments are ‘generally disfavored in the law’, the court
considers severally each of these factors.” Id. (quoting Mason &
Hanger-Silas Mason Co. v. Metal Trades Council, 726 F.2d 166, 168
3
(5th Cir. 1984)). However, "where there is a willful or intentional
failure to respond, the inquiry ends, and the Court need not make
any other findings in refusing a party's request to set aside a
default." Block Corp v. Nunez, No. 1:08-CV-53, 2009 WL 198366, at
*3 (N.D. Miss. Jan. 26, 2009), (citing In re Dierschke, 975 F.2d
181, 184 (5th Cir. 1992)).
3. Court’s Analysis
The primary factor the Court must examine is whether the
Defendants’ default was willful. Although Defendants were unaware
that their attorney’s staff member erred by not filing an answer to
the complaint, the fact that the Defendants’ attorney and the
Defendants neglected the issue for nearly two years after the
complaint was filed and served against them, indicates a willful
default. Furthermore, Defendants’ attorney was instructed at the
prove
up
hearing
to
provide
some
proof
that
the
answer
to
Plaintiff's complaint was sent to the wrong address. This could be
via email records or an affidavit stating that the staff member
mistakenly filed the answer. The Court gave Defendants thirty days
to produce such evidence, and they failed to do so.
In
a
recent
decision,
the
Fifth
Circuit
held
that
the
defendant defaulted willfully when there was no evidence that the
defendant made any effort to resolve the matter before the entry of
default. See Wooten v. McDonald Transit Associates, Inc., No. 1311035, 2015 WL 3622111, at *15, –- F.3d –-, (5th Cir. June 10,
4
2015). The defendant argued that it rushed to court as soon as it
learned the district court had entered a default judgment against
it. Id.
The Wooten court noted that “this late breaking diligence
pales in comparison to the kind of post-service conduct that we
have found to foreclose a finding of willfulness.” Id. (citing Lacy
v. Sitel Corp., 227 F.3d at 292-93, (5th Cir. 2000)(holding that
the defendant’s default was not willful when its counsel “made
repeated contacts with [the plaintiff] in an attempt to resolve the
suit”)).
This Court finds that the Defendants’ willfulness of default
falls somewhere in between that of the defendants in Lacy and
Wooten.
Although
the
Defendants’
counsel
appeared
at
the
evidentiary hearing and attempted to present a defense to the
claims against them, “this late breaking diligence” is not enough
to negate willfulness when “there [is] no evidence that the
defendant made any effort to resolve the matter before the entry of
default.” Wooten, 2015 WL 3622111, at *15, –- F.3d –-. Further,
Defendants claim they have had “numerous communications” with Tyson
that would present a meritorious defense by showing the mobile home
which they delivered was the same mobile home that Tyson selected
at Quality Homes, and that Tyson was satisfied with the repairs
made to the home. Mot. Set Aside Default J.
¶¶ 21-22. However,
according to the ruling in Lacy, these “communications” must have
been made “in an attempt to resolve the suit” in order to show that
5
the Defendants default was not willful. Lacy, 227 F.3d at 292-93.
Although there were communications between Defendants and Tyson
prior to when default judgment was entered against Defendants,
because the communications were not made in attempt to resolve the
suit and avoid a default judgment the Court finds that default by
the Defendants was willful.
“A finding of willful default ends the inquiry, for ‘when the
court finds an intentional failure of responsive pleadings there
need be no other finding.’” Id. (quoting Dierschke, 975 F.2d at
184). Thus, the Court need not complete the “good cause” analysis
and may deny the Defendants’ motion because the default was
willful.
B. Rule 60(b)
1. Parties’ Arguments
Defendants argue that: (1) it was the counsel's firm that was
not diligent in supervising its support staff, and that Quality
Homes or Fresh Start should not be prejudiced by the actions or
inactions of counsel and his staff; and (2) they sought counsel in
a timely manner and “pursued the matter from that point forward,”
and that the facts and circumstances certainly fall under the
excusable neglect exception. Mot. Set Aside Default J. ¶ 29.
Tyson argues: (1)[]that, along with Defendants’ attorney, the
Defendants should also be reasonably expected to make an inquiry
regarding the progress of a pending lawsuit at a time when they
6
have heard nothing from their attorney, the court, or opposing
counsel for a period of nearly two years; (2) that the Defendants
can make no meritorious defense; (3) that if any prejudice is to
inure from the result of these proceedings it should inure to the
Plaintiff who has already taken all necessary steps to litigate
this
case
to
finality,
and
the
Defendants’
choice
not
to
participate in the litigation should not prejudice the Plaintiff;
and (4) that the defendants are no less culpable than their
attorney. Resp. ¶¶ 20,14,30, 23.
2. Standard
Rule 60(b)(1) provides relief from a default judgment that
results from mistake, inadvertence, surprise, or excusable neglect.
Fed. R. Civ. P. 60(b)(1). Rule 60(b)(1) is understood to encompass
situations in which the movant's failure to respond is attributable
to his own negligence.
See Pioneer Inv. Servs. Co. v. Brunswick
Assocs. Ltd. P’ship, 507 U.S. 380, 394 (1993). Because Congress
provided no guideposts for determining what categories of neglect
are excusable, the Pioneer court emphasized an equitable inquiry
"taking account of all relevant circumstances surrounding the
party's omission." Id. Although the concept of excusable neglect is
"somewhat elastic,” it generally excludes gross carelessness,
ignorance of the rules, or ignorance of the law. Id. Additionally,
courts generally look at three factors in ruling on a motion to set
aside a default judgment under Rule 60(b)(1): (1) the extent of
7
prejudice to the plaintiff; (2) the merits of the defendant's
asserted defense; and (3) the culpability of the defendant's
conduct. Hibernia National Bank v. Administracion Central Sociedad
Anonomia, 776 F.2d 1277, 1280 (5th Cir. 1985). “The defendant has
the burden of showing by a preponderance of the evidence that its
neglect was excusable, rather than willful.” Wooten, 2015 WL
3622111, at *14, –- F.3d –- (citing In re Chinese Manufactured
Drywall Prods. Liab. Litig., 742 F.3d 576, 594 (5th Cir. 2014)).
3. Court’s Analysis
The Court finds that neither the Defendants nor their attorney
inquired about the pending lawsuit for a term of nearly two years.
Additionally, on February 3, 2015, this Court granted Defendants
thirty more days to produce evidence showing that their behavior
was “excusable neglect.” Defendants have failed to do so. This
Court agrees with Tyson that a reasonable person would or should
have inquired about the status of a pending lawsuit against them
after a period of nearly two years.
In conclusion, the Defendants and/or their attorney had the
opportunity as well as the responsibility to inquire about this
lawsuit,
but
neglectfully
failed
to
do
so.
No
evidence
of
“excusable neglect” has been provided after a thirty day period was
granted to do so. “Gross carelessness” is generally excluded from
the “excusable neglect” exception, and shall be here. For the above
reasoning, the Court finds that the Defendants’ default does not
8
fall under the Rule 60(b) exception.
Furthermore, as determined above, this default is believed to
have been willful by the Defendants. Therefore, no further inquiry
as to denying the motion to set aside the default judgment is
needed.
However,
the
Rule
60(b)
“excusable
neglect”
analysis
confirms the Court’s findings that Defendants’ Motion to Set Side
Default Judgment should be denied.
III. Order
IT IS HEREBY ORDERED that Defendant Quality Homes of McComb,
Inc.’s Motion to Set Aside Default Judgment under Rule 55(c) or
Rule 60(b) is DENIED.
IT IS FURTHER ORDERED that Defendant Fresh Start Transport,
Inc.’s Motion to Set Aside Default Judgment under Rule 55(c) or
Rule 60(b) is DENIED.
SO ORDERED on this the 16th
day of
June
2015.
/s/ David Bramlette
UNITED STATES DISTRICT JUDGE
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