Boncek v. Professional Recovery Consultants, Inc.

Filing 30

MEMORANDUM AND ORDER : IT IS HEREBY ORDERED that Plaintiffs Notice of Default Judgment and Motion to Strike Defendant's Answer (Doc. # 6 ) (ECF No. 9 ) is DENIED. IT IS FURTHER ORDERED that Motion to Set Aside or Vacate Default Judgment and t o Deem Defendant's Answer and Affirmative Defenses Valid as Filed (ECF No. 14 ) is GRANTED. The Court vacates the default judgment and holds that Defendant's Answer and Affirmative defenses are valid as filed. IT IS FINALLY ORDERED that Defendant Professional Recovery Consultants, Inc.'s Motion for A Protective Order (ECF No. 21 ) is GRANTED. Signed by District Judge Ronnie L. White on 11/08/2016. (KCB)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION
VICKI BONCEK,
Plaintiff,
vs.
PROFESSIONAL RECOVERY
CONSULTANTS, INC. ,
Defendant.

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Case No. 4:16CV361 RLW

MEMORANDUM AND ORDER
This matter is before the Court on Plaintiffs Notice of Default Judgment and Motion to
Strike Defendant' s Answer (Doc. # 6) (ECF No. 9), Motion to Set Aside or Vacate Default
Judgment and to Deem Defendant' s Answer and Affirmative Defenses Valid as Filed (ECF No.
14), and Defendant Professional Recovery Consultants, Inc. ' s Motion for A Protective Order (ECF
No . 21).
I.

Plaintiff's Notice of Default Judgment and Motion to Strike Defendant's
Answer (Doc. # 6) (ECF No. 9), Motion to Set Aside or Vacate Default
Judgment and to Deem Defendant's Answer and Affirmative Defenses Valid
as Filed (ECF No. 14)

On February 9, 2016, Plaintiff Vicki Boncek ("Plaintiff') filed a Petition for violations of
the Fair Debt Collection Practices Act against Defendant Professional Recovery Consultants, Inc.
("Defendant") in the associate circuit court of St. Louis County, Missouri. On March 16, 2016,
Judge Lawrence J. Permuter, Jr. , Associate Circuit Court Judge for St. Louis County, entered
default judgment against Defendant. See 16SL-AC03761. On March 17, 2016, Defendant filed
a Notice of Removal in this Court. (ECF No. 1). On March 23 , 2016, Defendant filed an answer

in this Court. On April 7, 2016, Plaintiff moved to strike Defendant's answer. (ECF No. 9).

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On April 14, 2016, Defendant moved to set aside the default and deem its answer and affirmative
defenses valid. (ECF No. 14).
The entry of default judgment occurred before the 30-day removal deadline. Defendant
retained Missouri counsel one day after the "return date" set for Defendant and twenty-three days
after being served with process. Defendant requests that this Court set aside or vacate the default
judgment pursuant to Fed. R. Civ. P. 59(e) or Fed. R. Civ. P. 60(b). (ECF No. 12). Defendant, a
Michigan-based company, did not understand the significance of the "return date" as the answer
deadline. (ECF No. 12 at 6). Defendant claims " [a]midst the flourish of activity surrounding
Defendant's rapid retention of the undersigned on March 17, 2016 and the face of the press of
other business, the undersigned unwittingly prepared, received approval for, and filed Defendant's
Answer while overlooking the judgment entered in the state court and under the misimpression
that his answer would be timely pursuant to Fed. R. Civ. P. 81(c)(2)(C)." (ECF No. 12 at 6).
Defendant claims that this error was unintentional and that it has proceeded in good faith. See
Rule 59(e). In the alternative, Defendant asserts that good cause exists for the Court to set aside
or vacate the default judgment under Rule 60(b ). Under Rule 60(b)(1 ), the Court may relieve a
party from a final judgment based upon "mistake, inadvertence, surprise, or excusable neglect."
Defendant asserts that its "counsel was attentive to this case once retained for defense and
promptly acted in its representative capacity in this matter." (ECF No. 12 at 8). Defendant
contends that its failure to obtain Missouri counsel sooner was not in bad faith and was quickly
cured.
In response, Plaintiff admits that Federal Courts have the authority to issue necessary
orders for properly removed state court matters. (ECF No. 18 at 2). Plaintiff even admits that
Federal Courts can set aside a state-court default judgment. (ECF No. 18 at 5). Plaintiff argues
that removal was improper because the state court default judgment was not set aside initially,
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prior to removal. (ECF No. 18 at 2). Even if this matter was properly removed, Plaintiff argues
that Defendant has not met its burden in requesting the default judgment be vacated. (ECF No. 18
at 2). Plaintiff claims that she has "expended much energy, time and wasted correspondence with
Defendant's counsel in order to reinforce an already valid default judgment and has caused
Plaintiff to incur unnecessary attorney's fees and emotional distress."

(ECF No. 18 at 4).

Plaintiff argues that vacating the default judgment under Rule 59(e) is improper because Rule
59(e) motions serve a limited function of correcting manifest errors of law or to present newly
discovered evidence. (ECFC No. 18 at 5-6). Plaintiff argues that the stricter standard under Fed.
R. Civ. P. 60(b) applies for setting aside a default once it has ripened into a judgment. (ECF No.
18 at 7). Plaintiff argues that Defendant has not provided any case law to support its position that
to set aside the defaultjudgment under Rule 60(b)(l). (ECF No. 18 at 7-8). Plaintiff cites to the
legal qualifications of defense counsel as argument that they should not have missed the deadline
for filing an answer and should have sent a representative to the March 16, 2016 hearing on the
motion for default judgment. Plaintiff further contends that defense counsel's failure to properly
docket the answer date does not constitute excusable neglect under Rule 60(b). Plaintiff claims
that Defendant has acted in bad faith and/or with willful disregard to the Court' s procedures by
removing this action "hoping to usurp the state-court default judgment." (ECF No. 18 at 10-12).
The Court has jurisdiction to enter an order vacating or setting aside the default judgment
of the state court. Butner v. Neustadter, 324 F.2d 783, 786 (9th Cir. 1963) (after removal, "a
motion to set aside a default may be made in the district court under Fed. R. Civ. P. 60(b) because
of mistake, inadvertence, surprise, or excusable neglect"); Barner v. Thompson/Ctr. Arms Co. Inc.,
796 F .3d 897, 901 (8th Cir. 2015). Further, the court may set aside the default judgment under
either Rule 59(e) or Rule 60(b). The Court notes that counsel for Defendant learned of this matter
one day after the state court default judgment was entered and then counsel promptly removed this
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action to Federal Court.

Defendant has shown that its failure to timely answer Plaintiff's Petition

was unintentional or based upon excusable neglect. Based upon the short time period while
Defendant was in default, this Court has good cause for setting aside the default judgment and
allowing this case to proceed on the merits. Johnson v. Dayton Elec. Mfg. Co., 140 F.3d 781 , 785
(8th Cir. 1998) (quoting Shepard Claims Serv., Inc. v. William Darrah & Associates, 796 F.2d
190, 193 (6th Cir. 1986) ("' when the grant of a default judgment precludes consideration of the
merits of a case, even a slight abuse of discretion may justify reversal "'); Johnson v. Dayton Elec.

Mfg. Co., 140 F.3d 781 , 784 (8th Cir. 1998) (citing Oberstar v. FD.IC , 987 F.2d 494, 504 (8th
Cir.1993) (There is a "judicial preference for adjudication on the merits"). Therefore, the Court
vacates the default judgment and deems Defendant' s answer as filed.

II.

Defendant Professional Recovery Consultants, Inc.'s Motion for A Protective
Order

In its Motion, Defendant requests a Motion for a Protective Order to prevent Plaintiff from
conducting any "post-judgment discovery" pursuant to Fed. R. Civ. P. 69. (ECF No. 21). The
Court grants this Motion because the Court has vacated the state court default judgment.
Accordingly,

IT IS HEREBY ORDERED that Plaintiffs Notice of Default Judgment and Motion to
Strike Defendant's Answer (Doc. # 6) (ECF No. 9) is DENIED.

IT IS FURTHER ORDERED that Motion to Set Aside or Vacate Default Judgment and
to Deem Defendant' s Answer and Affirmative Defenses Valid as Filed (ECF No. 14) is

GRANTED. The Court vacates the default judgment and holds that Defendant's Answer and
Affirmative defenses are valid as filed.

IT IS FINALLY ORDERED that Defendant Professional Recovery Consultants, Inc.'s
Motion for A Protective Order (ECF No. 21) is GRANTED.
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Dated this

gth

day of November, 2016.

~
#h
~!EL.WHITE

UNITED ST A TES DISTRICT JUDGE

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