CARTER v. CITY OF HIGH POINT

Filing 22

MEMORANDUM OPINION AND ORDER signed by CHIEF JUDGE WILLIAM L. OSTEEN, JR on 09/12/2017, that the Motion to Set Aside Entry of Default (Doc. 13 ) is GRANTED. FURTHER that the Motion for Default Judgment (Doc. 11 ) is DENIED. FURTHER that Defendant shall answer or otherwise respond to the Complaint within ten (10) days of the entry of this Order.(Taylor, Abby)

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF NORTH CAROLINA
CRAIG CARTER,
Plaintiff,
v.
CITY OF HIGH POINT,
Defendant.

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1:17CV148

MEMORANDUM OPINION AND ORDER
OSTEEN, JR., District Judge
This matter is before the court on two motions: (1) a
Motion for Default Judgment filed by Plaintiff Craig Carter
(Doc. 11), to which Defendant City of High Point has filed a
response in opposition (Doc. 15); and (2) a Motion to Set Aside
Entry of Default filed by Defendant City of High Point (Doc.
13), to which Plaintiff has filed a response in opposition (Doc.
21). These matters are now ripe for resolution, and for the
reasons stated below, Plaintiff’s Motion for Default Judgment
(Doc. 11) will be denied, and Defendant’s Motion to Set Aside
Entry of Default (Doc. 13) will be granted.
I.

BACKGROUND
Plaintiff Craig Carter (“Plaintiff” or “Carter”) filed the

Complaint in this matter on February 23, 2017, asserting
violations of the Family Medical Leave Act (“FMLA”). (Complaint

(“Compl.”) (Doc. 1).) The Summons and Complaint were served on
Defendant City of High Point (“High Point”) on March 3, 2017,
via certified mail, return receipt requested, to the Mayor of
High Point. (Doc. 4; Ex. 1 (Doc. 4-1).) High Point asserts that
on March 3, 2017, the Summons and Complaint package was received
and signed for by a High Point meter reader who was providing
temporary assistance in the mail room. (Def.’s Br. in Supp. of
Mot. to Set Aside Entry of Default (“Def.’s Br.”) (Doc. 14) at
2.) From there the package was sent to an administrative
assistant in the City Manager’s office, then to the Deputy City
Manager, and then to Human Resources. (Id.) The package was not
sent to the Mayor or the City Attorney. (Id.)
High Point failed to plead or otherwise defend as required
by Rule 55(a) of the Federal Rules of Civil Procedure and, upon
request of Plaintiff, default was entered on March 28, 2017.
(Doc. 6.)
On March 30, 2017, High Point’s City Attorney received a
copy of Plaintiff’s motion for entry of default; it is alleged
that this is when High Point first became aware of the lawsuit.
(Def.’s Br. (Doc. 14) at 2-3.) The City Attorney immediately
notified counsel for High Point who then contacted counsel for
Plaintiff via telephone. (Id. at 3; see Pl.’s Br. in Supp. of
Mot. for Default J. (Doc. 12) at 2.) Plaintiff’s counsel
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informed High Point counsel that he was about to file a Motion
for Default Judgment. (Pl.’s Br. in Resp. to Def.’s Mot. to Set
Aside Entry of Default (“Pl.’s Resp.”) (Doc. 21) at 2.) High
Point counsel requested that Plaintiff set aside the default.
(Def.’s Br. (Doc. 14) at 3.) Plaintiff’s counsel advised that he
would consider a stipulation to dismiss the default in exchange
for Defendant’s agreement not to oppose an amendment to
Plaintiff’s Complaint. (Id.; Pl.’s Resp. (Doc. 21) at 3.) Both
parties agreed that High Point counsel would draft a proposed
stipulation to set aside default for consideration by Plaintiff.
(Def.’s Br. (Doc. 14) at 3; (Pl.’s Resp. (Doc. 21) at 3.) The
attorneys also agreed to speak again the next day, March 31,
2017. (See Def.’s Br., Ex. B (Doc. 14-2) at 2.) After conferring
on March 31, the attorneys agreed to consult their respective
clients regarding the issue. (Def.’s Br. (Doc. 14) at 4; Pl.’s
Resp. (Doc. 21) at 3.) In the meantime, High Point counsel filed
a Notice of Appearance. (Doc. 10.) After Plaintiff’s counsel
conferred with Plaintiff, he emailed High Point counsel of his
intention to move forward with filing a motion for default
judgment. (Def.’s Br., Ex. C. (Doc. 14-3) at 2.)
Plaintiff’s Motion for Default Judgment was filed on
March 31, 2017. (Doc. 11.) High Point filed its Motion to Set
Aside Entry of Default on April 7, 2017. (Doc. 13.)
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A.

Facts of Underlying Litigation

Carter began working for High Point on March 17, 2008.
(Compl. (Doc. 1) ¶ 8.) The essential functions of Carter’s job
included maintaining overhead powerline equipment and
maintenance of city powerlines and infrastructure. (Id. ¶ 10.)
Carter alleges that he “adequately performed his job to the
legitimate expectations of [High Point], he maintained
consistently positive performance reviews, and did not have a
disciplinary history prior to the discriminatory performance
review that led to his termination.” (Id. ¶ 9.)
In November 2014, High Point approved Carter for leave
under the FMLA for knee surgery. (Id. ¶ 13.) Carter began taking
FMLA leave around November 4, 2014, and returned to work around
March 1, 2015. (Id. ¶¶ 13, 14.) On March 24, 2015, High Point
issued Carter an employee performance appraisal that stated
Carter’s overall performance “met expectations,” but his
attendance and punctuality were below expectations stating he
“does not accumulate sick leave well.” (Id. ¶ 15; Ex. 1 to
Compl. (Doc. 1-1) at 7-8.)1

All citations in this Memorandum Opinion and Order to
documents filed with the court refer to the page numbers located
at the bottom right-hand corner of the documents as they appear
on CM/ECF.
1

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Following his review of this performance plan, Carter was
asked to meet with the director of High Point’s electric
department on April 10, 2015. (Compl. (Doc. 1) ¶ 17.) At this
meeting, Carter was presented with the same March 24 performance
appraisal, but it had been altered to show an overall
performance of “below expectations,” and his attendance and
punctuality were altered to read “does not accumulate sick leave
well as reflected from 3-18-14 to 11-4-14.” (Id. ¶ 18; Ex. 2 to
Compl. (Doc. 1-2) at 7-8.) Carter also alleges he was presented
with an employee improvement plan and was told to sign both the
performance appraisal and the improvement plan or face
termination. (Compl. (Doc. 1) ¶ 19.)
On April 28, 2015, High Point held another meeting with
Carter where he was reprimanded for having been tardy on one day
since the implementation of the plan, and where he was also
accused of making his team late to a job. (Id. ¶ 20.) Carter was
suspended following that meeting. (Id.)
On May 1, 2015, High Point held another meeting with Carter
regarding his employment. (Id. ¶ 22.) On May 6, 2015, High Point
notified Carter via telephone that he was being terminated.
(Id.) On June 24, 2015, Carter attempted to appeal his
termination to the City Manager, stating that he felt that his
termination was related to his FMLA leave. (Id. ¶ 23.) Carter
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alleges that there “was a causal connection between Carter’s
protected activity, [and High Point’s] negative performance
review and termination.” (Id. ¶¶ 25-32.) Carter alleges he has
suffered pecuniary injury because of his termination. (Id.
¶ 24.)
II.

LEGAL STANDARD
Under Federal Rule of Civil Procedure 55(c), this court

“may set aside an entry of default for good cause.” Fed. R. Civ.
P. 55(c). In determining whether good cause exists for setting
aside an entry of default, the Fourth Circuit has set forth six
factors to 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) “whether there is
a history of dilatory action”; and (6) “the availability of
sanctions less drastic.” Payne ex rel. Estate of Calzada v.
Brake, 439 F.3d 198, 204–05 (4th Cir. 2006) (citations omitted).
This court also notes that an “extensive line of decisions” has
held that “Rules 55(c) and 60(b) are to be liberally construed
in order to provide relief from the onerous consequences of

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defaults and default judgments.”2 Tolson v. Hodge, 411 F.2d 123,
130 (4th Cir. 1969) (citations omitted).
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
Preparatory Acad., Inc. v. Hoover Universal, Inc., 616 F.3d 413,
417 (4th Cir. 2010).
III. ANALYSIS
A.

Whether Defendant has a Meritorious Defense

In determining whether there is a meritorious defense for
purposes of setting aside a default, “all that is necessary to
establish the existence of a ‘meritorious defense’ is a
presentation or proffer of evidence, which, if believed, would
Although [courts] have analyzed Rule 55(c) and Rule
60(b) motions using the same factors, see United
States v. Moradi, 673 F.2d 725, 727–28 (4th Cir.
1982), the burden on a movant seeking relief under the
two rules is not the same. . . . Rule 60(b) motions
request relief from judgment, which implicates an
interest in ‘finality and repose,’ see id., a
situation that is not present when default has been
entered under Rule 55(a) and no judgment has been
rendered. Therefore, while an analysis under each rule
employs similar factors, Rule 60(b)’s ‘excusable
neglect’ standard is a more onerous standard than Rule
55(c)’s ‘good cause’ standard, which is more forgiving
of defaulting parties because it does not implicate
any interest in finality.
2

Colleton Preparatory Acad., Inc. v. Hoover Universal, Inc., 616
F.3d 413, 420 (4th Cir. 2010).
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permit either the Court or the jury to find for the defaulting
party,” or which would establish a valid counterclaim. United
States v. Moradi, 673 F.2d 725, 727 (4th Cir. 1982); Augusta
Fiberglass Coatings, Inc. v. Fodor Contracting Corp., 843 F.2d
808, 812 (4th Cir. 1988). High Point identified the following
defenses: (1) High Point had independent reasons for terminating
Carter, such as habitual attendance and punctuality issues,
which were unrelated to his FMLA leave; (2) High Point’s actions
were based upon legitimate, non-discriminatory, and nonretaliatory reasons unrelated to Carter’s FMLA leave; and (3)
Carter has not established any causal connection between his
termination and any protected activity. (Def.’s Br. (Doc. 14) at
6-7; see Aff. of Garey Edwards (Doc. 16).) Defendant also cited
to supporting authority for its asserted defenses. (Def.’s Br.
(Doc. 14) at 7). This court finds that Defendant has
sufficiently proffered a meritorious defense for purposes of
setting aside the entry of default on this factor.
B.

Whether Defendant Acted with Reasonable Promptness

Whether High Point acted with reasonable promptness in
moving to set aside the entry of default is not contested here.
High Point contends that upon discovering it had been served
with this lawsuit and that a default had been entered, it acted
immediately by contacting High Point’s counsel who in turn
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immediately contacted Plaintiff’s counsel to request consent to
set aside the default. (Def.’s Br. (Doc. 14) at 5.) High Point
also contends that “[w]ithin hours, [it] launched an
investigation as to the cause of the delay.” (Id.) Plaintiff
concedes that “Defendant’s counsel moved with reasonable
promptness upon learning of the entry of default.” (Pl.’s Resp.
(Doc. 21) at 4.)
This court agrees that High Point acted timely when,
immediately upon learning of the entry of default, its counsel
contacted Plaintiff’s counsel to request consent to set aside
the default. Seven days after learning that Plaintiff would not
consent, High Point filed its motion to set aside the entry of
default, which was only ten days after the actual entry of
default.
C.

Personal Responsibility of the Defaulting Party and
Whether There is a History of Dilatory Action

Under the personal responsibility factor, the initial focus
is to determine whether or not the defaulting party was
personally responsible for the default. “When the party is
blameless and the attorney is at fault, the [preference for
trials on the merits] control[s] and a default judgment should
ordinarily be set aside. When the party is at fault . . . the
party must adequately defend its conduct in order to show
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excusable neglect.” Augusta, 843 F.2d at 811 (discussing factor
in context of relief from default judgment under Rule 60(b)).
Here, as asserted by Plaintiff and acknowledged by High Point,
the mishandling of the Summons and Complaint was the fault of
High Point. Plaintiff argues that because High Point was at
fault in failing to properly train its employees regarding the
receipt of legal service, “this factor should weigh heavily
against [High Point] in its motion to set aside the entry of
default.” (Pl.’s Resp. (Doc. 21) at 6-7.) Plaintiff relies in
part on Park Corp. v. Lexington Ins. Co., 812 F.2d 894, 897 (4th
Cir. 1987), for this position.
This case is similar to Park in that the summons and
complaint were received by the defaulting party in its own
mailroom, but the papers were subsequently lost as a result of
mishandling by its own employees. Park, 812 F.2d at 897.
However, this case can also be distinguished from Park, much
like the case in Colleton wherein the court stated that in Park,
“unlike here, the defaulting party offered no explanation for
the disappearance of the summons and complaint, and made no
showing that its internal procedures were designed to avoid such
occurrences.” Colleton, 616 F.3d at 420. Because of this, “the
district court could not determine whether [the defaulting
party] had an acceptable excuse for lapsing into default.” Park,
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812 F.2d at 897. Park is further distinguishable in that its
analysis was under the more onerous standard of Rule 60(b)’s
“excusable neglect” as opposed to Rule 55(c)’s “good cause”
standard. Id.; see Colleton, 616 F.3d at 420. Here, High Point
admitted to its mishandling, investigated its cause, offered an
explanation, and asserted that it “intend[ed] to implement
appropriate measures to safeguard against such issues going
forward.” (Def.’s Br., Ex. A (Doc. 14-1) ¶ 11.)
Furthermore, High Point asserts that it does not have a
history of dilatory action, and “has not experienced similar
issues in the past.” (Id. ¶ 11; Def.’s Br. (Doc. 14) at 9.) Nor
did Plaintiff offer any evidence of a history of dilatory action
by High Point. (See Pl.’s Resp. (Doc. 21) at 4.) As such,
although High Point is personally responsible for the default,
that fact alone does not require denying High Point’s motion to
vacate the entry of default.
D.

Prejudice to Plaintiff and the Availability of
Sanctions Less Drastic

“In the context of a motion to set aside an entry of
default . . . delay in and of itself does not constitute
prejudice to the opposing party.” Colleton, 616 F.3d at 418.
Furthermore, “no cognizable prejudice inheres in requiring a
plaintiff to prove a defendant’s liability, a burden every
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plaintiff assumes in every civil action filed in every federal
court.” Id. at 419 (footnote omitted). However, Plaintiff
asserts this court should consider the following factors in
determining whether Plaintiff was prejudiced:
(1) whether the delay made it impossible for the
aggrieved party to present certain evidence; (2)
whether the delay hampered the non-defaulting party’s
ability to proceed with trial; (3) whether the delay
impaired the non-defaulting party’s ability to
complete discovery; and (4) whether the delay was used
by the defaulting party to commit a fraud.
Red Light Mgmt., Inc. v. Dalton, 315 F.R.D. 65, 73 (W.D. Va.
2016) (citing Lolatchy v. Arthur Murray, Inc., 816 F.2d 951,
952–53 (4th Cir. 1987); Burton v. TJX Cos., Inc., No. 3:07-CV760, 2008 WL 1944033, at *4 (E.D. Va. May 1, 2008)). (See Pl.’s
Resp. (Doc. 21) at 7.)
Plaintiff concedes that he “cannot make a showing of
prejudice under the four factors above,” but that he has
suffered prejudice nonetheless. (Pl.’s Resp. (Doc. 21) at 8.)
Specifically, Plaintiff alleges he has “suffered additional
expense caused by the delay” in the preparation of additional
motions, affidavits, and other documents. (Id.) This court
acknowledges that Plaintiff has suffered some prejudice by
incurring the additional expense of obtaining an entry of
default because of the delay. However, some of the additional
expenses were incurred because Plaintiff elected to proceed with
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the filing of a default judgment. This court does not find any
prejudice so extensive as to require any relief to rectify the
prejudice. This court is not aware of any history of dilatory
action by Defendant. This court will not award any fees at this
time.
VI.

CONCLUSION
Finding that the applicable factors weigh in favor of setting

aside the entry of default, IT IS HEREBY ORDERED that the Motion
to Set Aside Entry of Default (Doc. 13) is GRANTED.
IT IS FURTHER ORDERED that the Motion for Default Judgment
(Doc. 11) is DENIED.
IT IS FURTHER ORDERED that Defendant shall answer or
otherwise respond to the Complaint within ten (10) days of the
entry of this Order.
This the 12th day of September, 2017.

____________________________________
United States District Judge

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