Geiger et al v. H&H Franchising Systems, Inc. et al

Filing 158

ORDER denying Plaintiff's 154 Motion for Default Judgment. Signed by District Judge Kenneth D. Bell on 10/31/2019. (nvc)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF NORTH CAROLINA
CHARLOTTE DIVISION
CIVIL ACTION NO. 3:17-CV-00738-KDB-DSC
SHERRI HOLLEY
ROSEANN GEIGER,
Plaintiffs,
v.

ORDER

LINSALATA CAPITAL
MANAGEMENT LLC
H&H FRANCHISING SYSTEMS, INC.
GLENKAT, INC.
KATHLEEN HOLDEN
LINCAP MANAGEMENT COMPANY
GLEN HOLDEN
H.H. FRANCHISING SYSTEMS, INC.
HOME HELPERS HOLDING
COMPANY
LINSALATA CAPITAL PARTNERS
FUND VI, LP
LINCAP VI GP, LLC,
Defendants.

This matter is before the Court on Plaintiffs Notice of Request for Entry of Default (Doc.
No. 154) and Motion for Entry of Default (Doc. 154). Defendants Glenkat, Inc., Kathleen Holden
and Glenn Holden have filed their response to the request and motion (Doc. No. 157). No reply
has been filed. For the reasons discussed briefly below, the Court, having considered the motion,
the parties’ arguments in support of and in opposition to it and the other relevant portions of the
record, DENIES the motion.
Legal Standard
Rule 55 of the Federal Rules of Civil Procedure governs the entry of default and default
judgments in civil actions in Federal Court. Rule 55(a) states that the clerk must enter default

“[w]hen a party against whom a judgment for affirmative relief is sought has failed to plead or
otherwise defend, and that failure is shown by affidavit or otherwise.” Fed. R. Civ. P. 55(a).
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). Whether a default
judgment should be entered or respondents allowed to answer is a matter resting in the sound
discretion of the district court. Werner v. Carbo, 731 F.2d 204, 206 (4th Cir. 1984).
Discussion
Plaintiffs seek entry of default in this action for defendant Glenkat’s failure to retain
substitute counsel by July 20, 2019, as ordered by the Court. See Doc. 150. Glenkat does not
dispute that failure. Rather, by affidavit of Glenn Holding, it has established that the reason for its
lack of counsel by that date was the company’s insufficient financial means to engage substitute
counsel and that as soon as its insurer agreed to pay for counsel, it engaged new counsel. Shortly
thereafter, and less than two weeks after the date ordered by the Court, Elizabeth Martineau filed
an appearance as counsel of record for Glenkat, Kathleen Holding and Glenn Holding on July 31,
2019. See Doc. 155. Accordingly, the Court finds in the exercise of its discretion that default
should not be entered against Glenkat and this action should proceed to be adjudicated on the
merits of the plaintiffs’ and defendants’ asserted claims and defenses, if not earlier resolved among
the parties.
IT IS, THEREFORE, ORDERED that:
Plaintiff’s Motion for Default Judgment (Doc. No. 154) is DENIED.
Signed: October 31, 2019