SOLIS v. HICKMAN, et al
Filing
15
MEMORANDUM OPINION AND ORDER signed by MAG/JUDGE L. PATRICK AULD on 1/30/12, that Defendant Parker's Motion to Set Aside Default and Reopen (Docket Entry 14 ) is GRANTED. (Law, Trina)
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF NORTH CAROLINA
HILDA L. SOLIS, Secretary of
Labor, United States Department
of Labor,
Plaintiff,
v.
MARTY HICKMAN, JOE CLAY PARKER,
AVERY HAIRSTON, EMBRENCHE, LLC,
and EMBRENCHE, LLC 401(K) PROFIT
SHARING PLAN,
Defendants.
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1:11CV379
MEMORANDUM OPINION AND ORDER
This
matter
comes
before
the
undersigned
United
States
Magistrate Judge on Defendant Joe Clay Parker’s Motion to Set Aside
Default and Reopen (Docket Entry 14). (See Docket Entry dated Jan.
18, 2012; see also Docket Entry dated May 12, 2011 (referring case
to Amended Standing Order 30).)
For the reasons that follow, the
instant Motion will be granted.1
Background
Plaintiff’s Complaint arises under the Employee Retirement
Income Security Act of 1974 (“ERISA”), 29 U.S.C. §§ 1001, et seq.
1
The entry of default (and thus the decision to set aside or to leave in
effect such an entry) constitutes a pretrial matter that does not dispose of any
claim or defense; as a result, courts have treated motions of this sort as
subject to disposition by a magistrate judge under 28 U.S.C. § 636(b)(1)(A).
See, e.g., Bailey v. United Airlines, 279 F.3d 194, 204 (3d Cir. 2002); L & M
Cos., Inc. v. Biggers III Produce, Inc., No. 3:08CV309-RJC-DCK, 2010 WL 1439411,
at *8 & n.3 (W.D.N.C. Apr. 9, 2010) (unpublished). Under these circumstances,
the undersigned Magistrate Judge will enter an order rather than a
recommendation.
(See Docket Entry 1 at 1.)
It alleges that Embrenche, LLC
(“Embrenche”) is the sponsor and administrator of the Embrenche,
LLC 401(k) Profit Sharing Plan (the “Plan”), an employee benefit
plan within the meaning of Section 3(3) of ERISA, 29 U.S.C. §
1002(3) (see id., ¶¶ 3, 7).
The Complaint further asserts that
Defendants Joe Clay Parker (“Parker”), Avery Hairston (“Hairston”),
and Marty Hickman (“Hickman”) either are or have been a trustee,
administrator, and named fiduciary of the Plan (see id., ¶¶ 4, 5,
6).
According to the Complaint, Embrenche ceased operations and
thereafter effectively abandoned the Plan resulting in harm to the
Plan participants and violations of ERISA.
(See id., ¶¶ 10-12.)
The Complaint in this action was filed on May 11, 2011.
Docket Entry 1.)
(See
The record shows that, on June 20, 2011,
Defendant Parker executed a Waiver of Service of Summons, which was
filed with this Court on July 12, 2011.
(Docket Entry 4.)
On
October 5, 2011, Plaintiff filed a Motion for Entry of Clerk’s
Default (Docket Entry 5) as to Defendant Parker on the basis that
he had “failed to plead or otherwise defend as provided by court
rules” (id. at 1).
2011.
(Docket
The Clerk entered such a default on October 11,
Entry
6.)
Thereafter,
on
October
18,
2011,
Defendant Parker, through counsel, belatedly filed an Answer to
Plaintiff’s Complaint.
(Docket Entry 7.)
On December 12, 2011,
Defendant Parker filed the instant Motion to Set Aside Default and
Reopen.
(Docket Entry 14.)
Plaintiff has not responded to the
-2-
instant Motion.
(See Docket Entries dated Dec. 12, 2011, to
present.)
Discussion
Under this Court’s Local Rules, failure to respond to a motion
generally warrants granting the relief requested.
See M.D.N.C. R.
7.3(k). Plaintiff has not provided any explanation for her failure
to respond and the record lacks any sign of a reason to depart from
the standard set by Local Rule 7.3(k).
Furthermore, the United
States Court of Appeals for the Fourth Circuit has “repeatedly
expressed a strong preference that, as a general matter, defaults
be avoided and that claims and defenses be disposed of on their
merits,” Colleton Prep. Acad., Inc. v. Hoover, Universal Inc., 616
F.3d 413, 417 (4th Cir. 2010).
Accordingly, the Court should
follow its normal rule and grant Defendant Parker’s instant Motion.
In addition, an analysis under the standard set forth in the
Federal Rules of Civil Procedure, as construed by the Fourth
Circuit, leads to the same conclusion.
The Federal Rules of Civil
Procedure provide that “[t]he court may set aside an entry of
default for good cause . . . .”
Fed. R. Civ. P. 55(c).
The Fourth
Circuit has identified the factors relevant to this determination
as follows:
When deciding whether to set aside an entry of default,
a district court should consider [1] whether the moving
party has a meritorious defense, [2] whether it acts with
reasonable promptness, [3] the personal responsibility of
the defaulting party, [4] the prejudice to the party, [5]
-3-
whether there is a history of dilatory action, and [6]
the availability of sanctions less drastic.
Payne v. Brake, 439 F.3d 198, 204–05 (4th Cir. 2006).
The Court
must liberally construe Rule 55(c) “to provide relief from the
onerous consequences of defaults and default judgments[,]” Lolatchy
v. Arthur Murray, Inc., 816 F.2d 951, 954 (4th Cir. 1987) (internal
quotation marks omitted), in light of the preference for meritsbased dispositions, see Colleton Prep. Acad., 616 F.3d at 417.
With respect to the first factor, given the early stages of
the instant proceeding, the record lacks sufficient information for
the Court to weigh the meritoriousness of Defendant Parker’s
defenses. The only filings addressing the substance of Plaintiff’s
claims are the Complaint (Docket Entry 1) and Defendant Parker’s
belated Answer (Docket Entry 7), which consists of little more than
a page of primarily single-word or single-sentence responses.
On
these facts, this factor does not support either the granting or
denial of Defendant Parker’s instant Motion.
Second, Defendant Parker took reasonably prompt action seeking
to set aside the default.
Defendant Parker filed the instant
Motion to set Aside Default and Reopen seven months after the
filing of the Complaint and roughly two months after the Clerk
entered the default.
(See Docket Entries 1, 6, 14.)
Recognizing
that “[w]hether a party has taken ‘reasonably prompt’ action . . .
must be gauged on the facts and circumstances of each occasion,”
United States v. Moradi, 673 F.2d 725, 727 (4th Cir. 1982), the
-4-
undersigned notes that other courts addressing this issue have
found similar delays reasonable.
See, e.g., Lolatchy, 816 F.2d at
952–54 (permitting case to proceed on the merits although moving
party delayed ten months after court entered default before filing
its motion to set aside default); Vick v. Wong, 263 F.R.D. 325, 330
(E.D. Va. 2009) (finding that reasonable promptness factor weighed
in favor of setting aside default where moving party did not
respond for more than two months after clerk entered default).
Furthermore, in the instant case, Defendant Parker filed his
belated Answer to the Complaint a mere 7 days after the entry of
default, thereby promptly demonstrating a desire to participate in
the action once the ramifications of his inaction came into focus.
(See Docket Entry 7.)
On these facts, the second factor favors
setting aside the entry of default.
Third, the responsibility for the entry of default rests
solely with Defendant Parker.
According to his instant Motion,
Defendant Parker had cooperated with the United States Department
of Labor on this matter since 2010 and “thought because of his
cooperation the government would not seek a judgment against him.”
(Docket Entry 14 at 1.)
Mr. Parker therefore did not take any
action with respect to the Complaint and did not seek the advice of
an attorney until October 17, 2011.
(Id.)
Accordingly, no blame
for Defendant Parker’s failure to participate in this action falls
-5-
upon his counsel or, in fact, any other individual involved.
This
factor thus weighs against setting aside the entry of default.
Fourth, Plaintiff can show no prejudice.
The record reflects
that Plaintiff failed to serve any Defendant but Defendant Parker
within 120 days of filing the Complaint as required by Federal Rule
of Civil Procedure 4(m).
Entry 2, ¶ 2.)
(See Docket Entry 8; see also Docket
After Plaintiff filed a motion for extension of
time to serve the remaining Defendants (Docket Entry 9), the Court
(per the undersigned Magistrate Judge) granted Plaintiff until
December 26, 2011, to effect service of process on Hickman,
Hairston, Embrenche and the Plan (Docket Entry 12).2
has
failed
to
proceed
due
to
the
lack
of
As the case
service
on
other
Defendants, Plaintiff cannot demonstrate any prejudice and this
factor thus favors Defendant’s instant Motion.
Fifth, there is no evidence that Defendant Parker has engaged
in any other dilatory litigation conduct.
dated May 11, 2011, to present.)
(See Docket Entries
This factor, therefore, supports
setting aside the entry of default.
Sixth, “[n]either party has suggested alternative sanctions,
but the Court [can] certainly consider any suggestions that are
brought
before
it,
such
as
a
motion
for
reimbursement
of
Plaintiff’s costs associated with [Plaintiff’s initial default].
Therefore, this factor counsels in favor of setting aside default.”
2
Defendants Hairston, Embrenche and the Plan apparently still have not
been served. (See Docket Entries dated Nov. 9, 2011, to present.)
-6-
Pinpoint IT Servs., L.L.C. v. Atlas IT Export Corp., No. 2:10CV516,
2011 WL 2748685, at *15 (E.D. Va. July 13, 2011) (unpublished)
(internal citation omitted).
In summation, as factors two, four, five and six weigh in
favor of setting aside the entry of default, factor three weighs
against, and factor one appears neutral, the balance of the factors
supports issuance of an order setting aside the entry of default.
Conclusion
The Court’s general rule provides that, where, as here, the
opposing party fails to respond to a motion, the Court should grant
the relief requested.
standard
warrants
Moreover, an analysis under the pertinent
setting
aside
the
entry
of
default
as
to
Defendant Parker (Docket Entry 6).
IT IS THEREFORE ORDERED that Defendant Parker’s Motion to Set
Aside Default and Reopen (Docket Entry 14) is GRANTED.
/s/ L. Patrick Auld
L. Patrick Auld
United States Magistrate Judge
January 30, 2012
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