Jewish Federation of Lincoln v. Rosenblatt

Filing 59

MEMORANDUM AND ORDER - Rosenblatt's motion to set aside default (filing 43 ) is granted. The Clerk's Entry of Default (filing 36 ) is set aside. The Jewish Federation's motion for default judgment (filing 37 ) is denied. The Jewis h Federation's motion for attorney fees (filing 45 ) is denied. Rosenblatt's motion for leave to file an answer out of time (filing 53 ) is granted. Rosenblatt's answer shall be filed on or before February 15, 2019. Ordered by Chief Judge John M. Gerrard. (Copy mailed to pro se party) (LKO)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEBRASKA
JEWISH FEDERATION OF
LINCOLN, INC., a Nebraska NonProfit Corporation,

4:18-CV-3048

Plaintiff,
MEMORANDUM AND ORDER
vs.
KURT KNECHT AND JENNIFER
ROSENBLATT,
Defendants.
This matter is before the Court on several motions relating to defendant
Jennifer Rosenblatt's default: Rosenblatt would like her default vacated and
leave to file an answer, while the plaintiff Jewish Federation of Lincoln is
pressing for a judgment. But the Court finds cause to excuse Rosenblatt's
default, so the Court will grant her motions and deny the Jewish Federation's.
PROCEDURAL BACKGROUND
The Jewish Federation's initial complaint against Rosenblatt was filed
on April 2, 2018. Filing 1. It's not clear when process was served, but
Rosenblatt, appearing pro se, filed a motion for extension of time to answer on
April 30. Filing 7. That motion was granted, and Rosenblatt's answer was due
on Friday, June 1. Filing 8. Rosenblatt missed that deadline, but on Monday,
June 4, the Court received Rosenblatt's motion to stay this civil case during
the pendency of a wire fraud prosecution brought against her based on the
same underlying conduct (Case No. 4:18-cr-3023). Filing 9. The Jewish
Federation opposed the motion and moved to strike it, filing 10, but the Court

simply denied it, filing 12. The Court extended Rosenblatt's answer deadline
to July 5. Filing 12.
Rosenblatt missed that deadline, and on July 6, the Jewish Federation
moved for default judgment. Filing 13. On July 9, Rosenblatt—still appearing
pro se from her home in Kansas—asked for another 30 days to answer. Filing
14. And she opposed default judgment. Filing 15. But those motions were
mooted by the Jewish Federation's filing of an amended complaint (filing 19)
and then a second amended complaint (filing 23). See filing 17; filing 18; filing
26. Rosenblatt filed a belated brief (filing 24) in opposition to the Jewish
Federation's motion for leave to amend its complaint, claiming not to have been
given appropriate notice of the motion for leave to amend. But the Court ruled
that the second amended complaint was properly filed and was (and remains)
the Jewish Federation's operative pleading. Filing 26. Rosenblatt's new answer
deadline was December 5. Filing 26 at 4.
Rosenblatt missed that deadline, and on December 10, the Jewish
Federation filed another motion for default judgment. Filing 32. But the Court
found that motion was premature because the Clerk of the Court had not been
asked to enter Rosenblatt's default—so, the Court directed the Clerk to enter
Rosenblatt's default and denied the Jewish Federation's motion without
prejudice. Filing 35. The Clerk's Entry of Default was entered on December 11.
Filing 36. On December 14, the Jewish Federation filed its pending motion for
default judgment. Filing 37.
On December 28, Rosenblatt—still representing herself by mail from
Kansas—filed a motion to set aside the default and opposition to default
judgment. Filing 43. She argued that she had a viable defense to the Jewish
Federation's claim, relating to the "amount in controversy," but contended that
question was "subsumed" in the criminal case (where the question of

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restitution is still unresolved). Filing 43. The Jewish Federation opposed
setting aside the default (filing 47) but, not content with simply opposing the
motion, also filed a motion for sanctions and attorney's fees (filing 45), claiming
that the motion to set aside default was interposed only for delay. See filing 46
at 2-3 (citing Fed. R. Civ. P. 11(b)).
On January 4, 2019, counsel appeared for Rosenblatt, see filing 49, and
through counsel, she filed a brief (filing 50) in support of her motion to set aside
default and in opposition to default judgment. The Court set a briefing
schedule on the pending motions. Filing 51. On January 17, Rosenblatt filed a
motion for leave to answer out of time, along with a proposed answer. Filing
53. All the pending motions have now been fully briefed and submitted.
DISCUSSION
As described above, there are a number of pending motions—but the
issue underlying all of them is Rosenblatt's default. So, the Court starts there.
Fed. R. Civ. P. 55(c) provides that the Court "may set aside an entry of
default for good cause. . . ." When examining whether good cause exists, the
Court weighs whether the conduct of the defaulting party was blameworthy or
culpable, whether the defaulting party has a meritorious defense, and whether
the other party would be prejudiced if the default were excused. Stephenson v.
El-Batrawi, 524 F.3d 907, 912 (8th Cir. 2008). And although the same factors
are typically relevant in deciding whether to set aside entries of default and
default judgments, relief from a default judgment requires a stronger showing
of excuse than relief from a mere default order. Johnson v. Dayton Elec. Mfg.
Co., 140 F.3d 781, 783 (8th Cir. 1998).
The Court finds good cause for setting aside the entry of default here.
The Eighth Circuit draws a distinction between contumacious or intentional
delay or disregard for deadlines and procedural rules, and a "marginal failure"
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to meet pleading or other deadlines. Id. at 784. And the Court is not unmindful
of the fact that Rosenblatt, while she repeatedly missed deadlines, was
representing herself from a distance, and at the same time facing a federal
criminal prosecution—circumstances that might test even experienced
counsel. See AGCO Fin., LLC v. Littrell, 320 F.R.D. 45, 50 (D. Minn. 2017).
Furthermore, contrary to the Jewish Federation's argument, Rosenblatt
may have a meritorious defense: her proposed answer sets forth her concession
that she should repay some, but not all, of the money demanded by the Jewish
Federation. Whether a meritorious defense exists is determined by examining
whether the proffered evidence would permit a finding for the defaulting party.
Stephenson, 524 F.3d at 914. "The underlying concern is whether there is some
possibility that the outcome after a full trial will be contrary to the result
reached by the default." Id. That concern is present here because there is an
actual dispute as to the amount of Rosenblatt's liability.
And finally, the Jewish Federation has made absolutely no showing of
how it would be prejudiced if the default were excused, given that "prejudice
may not be found from delay alone or from the fact that the defaulting party
will be permitted to defend on the merits." Johnson, 140 F.3d at 785. Instead,
setting aside a default must prejudice plaintiff in a more concrete way, such as
loss of evidence, increased difficulties in discovery, or greater opportunities for
fraud and collusion. Id. Delay is all the Jewish Federation has argued, see filing
47; filing 54; and that is not enough, see id.
In sum, default judgments are not favored by the law, and the entry of
default judgment should be a rare judicial act. See Comiskey v. JFTJ Corp.,
989 F.2d 1007, 1009 (8th Cir. 1993); U.S. on Behalf of & for Use of Time Equip.
Rental & Sales, Inc. v. Harre, 983 F.2d 128, 130 (8th Cir. 1993). The

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circumstances here do not warrant default judgment, so Rosenblatt's default
will be set aside. Her motion to set aside default (filing 43) will be granted.
Obviously, having reached that conclusion, the Jewish Federation's
motion for default judgment (filing 37) will be denied. The Court will also deny
the Jewish Federation's motion for sanctions and attorney's fees. Rule 11
sanctions may be warranted when a pleading or motion is presented for any
improper purpose, such as to harass or to cause unnecessary delay or needless
increase in the cost of litigation. See Clark v. United Parcel Serv., Inc., 460 F.3d
1004, 1008 (8th Cir. 2006). But the Court, having found merit to Rosenblatt's
motion, also finds that its purpose was proper. And the Court also notes that
the Jewish Federation itself failed to follow Rule 11: it did not comply with the
21-day "safe harbor" provision of the rule. See Rule 11(c)(2); Gordon v. Unifund
CCR Partners, 345 F.3d 1028, 1029-30 (8th Cir. 2003). Nor could it have, given
that it filed its motion for sanctions literally the first business day after
Rosenblatt's motion to set aside default was filed. See Gordon, 345 F.3d at
1030.
That leaves Rosenblatt's motion for leave to file an answer out of time
(filing 53). Fed. R. Civ. P. 6(b)(1)(B) permits the Court to extend the time for a
party to submit a filing if the party failed to act because of "excusable neglect."
Chorosevic v. MetLife Choices, 600 F.3d 934, 946 (8th Cir. 2010). Excusable
neglect is an "elastic concept" that empowers courts to accept, where
appropriate, late filings caused by inadvertence, mistake, or carelessness, as
well as by intervening circumstances beyond the party's control. Id. The
determination of whether neglect is excusable is at bottom an equitable one,
taking account of all relevant circumstances surrounding the party's omission.
Id. Factors that are particularly important include the possibility of prejudice
to the opposing party; the length of the delay and the possible impact of that

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delay on judicial proceedings; the reasons for delay; including whether the
delay was within the moving party's reasonable control; and whether the
moving party acted in good faith. Id.
The Court notes that Rosenblatt's motion is effectively unopposed—
while the Jewish Federation filed a response to Rosenblatt's motion to set aside
default after her motion for leave was filed, the Jewish Federation's brief did
not oppose the motion for leave. See filing 54. In any event, the same
considerations that weigh in favor of setting aside Rosenblatt's default—the
reasons for the omission and the lack of prejudice to the Jewish Federation—
also counsel in favor of granting leave to file an answer out of time. See
Chorosevic, 600 F.3d at 946-47. "The judicial preference for adjudication on the
merits goes to the fundamental fairness of the adjudicatory process." Oberstar
v. F.D.I.C., 987 F.2d 494, 504 (8th Cir. 1993). And this dispute will be resolved
on its merits.
IT IS ORDERED:
1.

Rosenblatt's motion to set aside default (filing 43) is granted.

2.

The Clerk's Entry of Default (filing 36) is set aside.

3.

The Jewish Federation's motion for default judgment (filing
37) is denied.

4.

The Jewish Federation's motion for attorney fees (filing 45)
is denied.

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5.

Rosenblatt's motion for leave to file an answer out of time
(filing 53) is granted.

6.

Rosenblatt's answer shall be filed on or before February 15,
2019.

Dated this 7th day of February, 2019.
BY THE COURT:

John M. Gerrard
Chief United States District Judge

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