Jackson National Life Insurance Company v. Barbara T. Russell Revocable Trust et al

Filing 40

ORDER granting 35 Motion to Set Aside Default; denying 22 Motion for Default Judgment; denying 24 Motion to Strike for the reasons set out in the order. Signed by District Judge Daniel P. Jordan III on June 16, 2015. (SP)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF MISSISSIPPI
NORTHERN DIVISION
JACKSON NATIONAL LIFE
INSURANCE COMPANY

PLAINTIFF

v.

CIVIL ACTION NO. 3:14cv766-DPJ-LRA

BARBARA T. RUSSELL REVOCABLE
TRUST, et al.

DEFENDANTS

ORDER
This interpleader action is before the Court on Cross-Plaintiffs’ Motion for Default
Judgment [22]; Cross-Plaintiffs’ Motion to Strike Answer to Cross-Claim [24]; and CrossDefendant’s Motion to Set Aside Clerk’s Entry of Default [35]. For the reasons that follow,
Cross-Plaintiffs’ motions are denied and Cross-Defendant’s motion is granted.
I.

Facts and Procedural History
On September 30, 2014, Plaintiff Jackson National Life Insurance Company brought this

interpleader action related to a dispute over the proper beneficiary under a life-insurance policy
on the life of Barbara T. Russell. Jackson National named as Defendants the following potential
claimants to the policy’s proceeds: the Barbara T. Russell Revocable Trust; William O. Stone,
its Trustee; and Ashley Russell Sheppard, Russell’s daughter. Jackson National interpleaded the
disputed funds [13] and was dismissed [17]. In the meantime, both Stone and the Trust (“CrossPlaintiffs”) [7] and Sheppard [15] answered the complaint, and on December 8, 2014, CrossPlaintiffs filed a crossclaim against Sheppard [16].
Sheppard did not timely answer the crossclaim, and Cross-Plaintiffs sought [20] and had
entered upon the record [21] Sheppard’s default. Thereafter, Cross-Plaintiffs filed their Motion
for Default Judgment [22], and Sheppard filed her belated answer to the crossclaim [23]. Cross-

Plaintiffs moved [24] to strike Sheppard’s tardy answer, and upon the entry of a Show Cause
Order [25], Sheppard responded to the pending motions [26, 27]. Following a series of
conferences with the magistrate judge, and after a new attorney appeared on her behalf, Sheppard
filed her Motion to Set Aside Clerk’s Entry of Default [35]. The Court has personal and subjectmatter jurisdiction and is prepared to rule.
II.

Analysis
Whether to enter default judgement under Rule 55(b)(2) rests within the sound discretion

of the Court. Lindsey v. Prive Corp., 161 F.3d 886, 893 (5th Cir. 1998); see Lewis v. Lynn, 236
F.3d 766, 767 (5th Cir. 2001). But “[d]efault judgments are a drastic remedy, not favored by the
Federal Rules and resorted to by courts only in extreme situations.” Lewis, 236 F.3d at 767
(quoting Sun Bank of Ocala v. Pelican Homestead & Sav., 874 F.2d 274, 276 (5th Cir. 1989)).
Default judgments “are ‘available only when the adversary process has been halted because of an
essentially unresponsive party.’” Sun Bank of Ocala, 874 F.2d at 276 (citing H.F. Livermore
Corp. v. Aktiengesellschaft Gebruder Loepfe, 432 F.2d 689, 691 (D.C. Cir. 1970)). The factors a
court should consider in deciding whether to grant a default judgment include:
whether material issues of fact [exist], whether there has been substantial
prejudice, whether the grounds for default are [clear], whether the default was
caused by a good faith mistake or excusable neglect, the harshness of a default
judgment, and whether the court would think itself obliged to set aside the default.
Lewis, 236 F.3d at 767. Finally, Rule 55(c) permits the Court to set aside an entry of default “for
good cause.”
In this case, there is no question that Sheppard was technically in default for failing to
timely answer the crossclaim. But within one week of Cross-Plaintiffs filing their motion for

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default judgment, Sheppard filed an answer that evidences material issues of fact between the
parties. And while Sheppard’s filings are less than clear as to the justification for her default, the
Court concludes that the slight delay will not cause substantial prejudice to Cross-Plaintiffs,
whereas a default judgment at this early stage in the litigation would be an unduly harsh result.
Stated simply, the purposes behind Rule 55 would not be served by entering default judgment
against Sheppard.
III.

Conclusion
The Court has considered all of the parties’ arguments. Those not specifically addressed

would not have changed the outcome. For the foregoing reasons, Cross-Plaintiffs’ Motion for
Default Judgment [22] and Motion to Strike Answer to Cross-Claim [24] are DENIED; and
Cross-Defendant’s Motion to Set Aside Clerk’s Entry of Default [35] is GRANTED.
SO ORDERED AND ADJUDGED this the 16th day of June, 2015.
s/ Daniel P. Jordan III
UNITED STATES DISTRICT JUDGE

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