Wilson et al v. Blanton et al
ORDER granting 9 Motion for Relief from Entry of Default. Signed by Judge Algenon L. Marbley on 9/26/2016. (cw)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF OHIO
CAROL A. WILSON, et al.
THOMAS J. BLANTON, JR., et al.,
Case No. 2:16-CV-00390
JUDGE ALGENON L. MARBLEY
Magistrate Judge Kemp
OPINION & ORDER
This matter is before the Court on Defendant Thomas J. Blanton, Jr.’s Motion for Relief
from Entry of Default under Federal Rule of Civil Procedure 55(c). (Doc. 9.) For the reasons that
follow, the Court GRANTS the Motion.
Plaintiffs, Carol A. Wilson, Administrator of the Ohio Operating Engineers Health and
Welfare Funds, and the Trustees of those Funds, filed this suit under the Employee Retirement
Income Security Act (“ERISA”) Section 515, 29 U.S.C. § 1145, against Defendants, Thomas
Blanton Jr. and Timothy Blanton, d/b/a Blanton Landscaping, on May 3, 2016. The suit alleges
that Defendants failed to make contributions pursuant to their collective bargaining agreement
with Local 18 of the Ohio Operating Engineers International Union. (Doc 1.) Both Defendants
failed to answer the complaint and Plaintiffs submitted an application to the Clerk for an entry of
default. (Doc. 7.) The Clerk entered default against both Defendants on July 6, 2016. (Doc. 8 at
3.) On July 12, 2016, Thomas Blanton moved this Court to set aside the entry of default against
him, which Plaintiffs oppose. (Docs. 9, 11). Defendant Timothy W. Blanton has not moved for
relief from the entry of default against him and, accordingly, that entry is not before the Court.
Blanton acknowledges that he received service of the lawsuit on June 8, 2016. (Doc. 9 at
2.) He declares that upon receipt of service he notified John Ruffolo, the attorney he usually
retains for matters concerning his business, of the lawsuit. (Blanton Decl., Doc. 9-1 at ¶ 9.)
However, due to a miscommunication, Ruffolo did not undertake representation of Blanton and
never filed an answer on his behalf. (Id. at ¶ 9). Blanton was unaware of Ruffolo’s decision not
represent him until he followed up with Ruffolo at a later date. (Id. at ¶ 10). Soon after learning
of Ruffolo’s decision, Blanton retained his current counsel in this matter and filed the motion for
relief from default. (Id. at ¶ 11.)
STANDARD OF REVIEW
Under Federal Rule of Civil Procedure 55(c), a party may move to set aside an entry of
default “for good cause.” On such a motion, the Court must consider three factors: (1) whether
the plaintiff will be prejudiced if the default is set aside; (2) whether the defendant has a
meritorious defense; and (3) whether the defendant was willful in his default. Dessault Systemes,
SA v. Childress, 663 F.3d 832, 839 (6th Cir. 2011) (quoting United Coin Meter Co. v. Seaboard
Coastline R.R., 705 F.2d 839 845 (6th Cir. 1983)). “Any doubt should be resolved in favor of the
petition to set aside the judgment so that cases may be decided on their merits.” United Coin
Meter, 705 F.2d at 846 (internal citations omitted); Dessault Systemes, 663 F.3d at 841.
A. Prejudice to Plaintiffs
In order to deny a motion to set aside an entry of default, a plaintiff must show prejudice
beyond mere delay. United Coin Meter, 705 F.2d at 845. A plaintiff must demonstrate “that
delay will ‘result in the loss of evidence, create increased difficulties of discovery, or provide
greater opportunity for fraud and collusion.’” INVST Fin. Group, Inc. v. Chem-Nuclear Sys., Inc.,
815 F.2d 391, 398 (6th Cir. 1987) (quoting Davis v. Musler, 713 F.2d 907, 916 (2d Cir. 1983)).
Plaintiffs’ only argument as to prejudice is that Blanton Landscaping is in the process of
dissolution and that granting Blanton’s motion to set aside default could delay judgment in
Plaintiffs’ favor. But as previously noted, mere delay is an insufficient ground to deny the
motion to set aside default. Moreover, because Defendant filed his motion shortly after the entry
of default, the prejudice to Plaintiff resulting from delay is minimal. Therefore, the first factor
weighs in favor of granting Defendant’s motion.
B. Meritorious Defense
Next, the Court considers whether Defendant has a meritorious defense to Plaintiffs’
claims. Likelihood of success is not the test for whether a defense is likely to succeed on the
merits; rather, the Court must determine if “there is some possibility that the outcome of the suit
after a full trial will be contrary to the result achieved by the default.” Dessault Systemes, 663
F.3d at 843 (quoting United States v. $22,050.00 U.S. Currency, 595 F.3d 318, 322 (6th Cir.
2010)). A defense is sufficient to merit setting aside a default if it contains “even a hint of
suggestion which, proven at trial, would constitute a complete defense.” INVST Fin. Group, 815
F.2d at 391.
In his proposed answer, Defendant asserts eleven affirmative defenses, including failure
to mitigate, duress or undue influence, lack of consideration, failure to state a claim, statute of
limitations, unclean hands, lack of standing, laches, and defenses that damages resulted from
Plaintiffs’ or third-party actions. (Doc. 9, Ex. B at 13-14.) The Sixth Circuit has ruled that
Section 515 of ERISA precludes defenses that arise out of union conduct, defects in contract
formation, and lack of consideration. Orrand v. Scassa Asphalt, Inc., 794 F.3d 556, 563-564, 566
(6th Cir. 2015). Further, the Sixth Circuit has held that laches is not a viable defense under § 515
when the suit is brought within the applicable statute of limitations. Operating Eng’rs Local 324
Health Care Plan v. G & W Const. Co., 783 F.3d 1045, 1055 (6th Cir. 2015). Therefore, § 515
precludes Defendant’s affirmative defenses of duress or undue influence, lack of consideration,
any defense based upon union conduct, and the doctrine of laches. That leaves the defenses of
failure to mitigate; failure to state a claim; statute of limitations; lack of standing; and that
damages resulted from Plaintiffs’ or third-party actions.
In reviewing Defendant’s first defense, while § 515 appears to preclude the consideration
of almost any defense related to the action of unions, the Sixth Circuit has left open the question
of whether a defense based upon the acts or omissions of a fringe-benefit fund is also precluded.
See id. at 1056. Further, the Sixth Circuit has recognized the contract defense of fraud in the
execution that would render the contract void ab initio and prevent a fringe-benefit fund from
collecting. Id. at 1052. Because Defendant has a colorable argument that some of his defenses
are “good at law,” this factor weighs in favor of setting aside the entry of default. Dessault
Systemes, 663 F.3d at 843 (citing $22,050, 595 F.3d at 326).
C. Culpable Conduct of the Defendant
Finally, “[t]o be treated as culpable, the conduct of a defendant must display either an
intent to thwart judicial proceedings or a reckless disregard for the effect of its conduct on those
proceedings.” Dessault Systemes, 663 F.3d at 841 (quoting Shepard Claims Serv. Inc. v. William
Darrah & Associates, 796 F.2d 190, 194 (6th Cir. 1992)). In defaults attributable to an attorney’s
inaction, courts frequently grant relief from default. Savin Corp. v. C.M.C. Corp., 98 F.R.D. 509,
510 (N.D. Ohio 1984). This is especially true when defense counsel acts immediately to cure the
default. Id.at 511.
Defendant contends that he did not act willfully in failing to file an answer because he
thought his regular attorney was representing him and the attorney took no action. (Thomas
Decl., Doc. 9-1 at ¶ 9.) Defendant also contends that he did not know until speaking a second
time with Ruffolo that Ruffolo had not agreed to represent him in this lawsuit. (Id. ¶ 10.)
Plaintiffs counter that Defendant is experienced in retaining counsel for his business affairs and,
therefore, his conduct is culpable. While it is likely true that Defendant has dealt with lawyers for
his business matters, this Court will not take the “drastic step which should be resorted to only in
the most extreme cases” of imposing a default judgment as a result of a miscommunication,
particularly because Defendant took immediate action to retain counsel after learning that his
regular attorney declined to take the case. United Coin Meter, 705 F.2d at 845. Further, the
expediency of the filing of the motion for relief from default also strengthens Defendant’s
arguments. The Court concludes that Defendant did not display intent to thwart this judicial
proceeding or a reckless disregard for the effect of his conduct on the proceeding. Therefore, the
third factor also favors granting Defendant’s motion.
Because the Court finds that Plaintiffs will be only minimally prejudiced, Defendant has
a meritorious defense, and Defendant’s conduct was not culpable, Defendant Thomas Blanton’s
Motion for Relief from Entry of Default is GRANTED. (Doc. 9.)
IT IS SO ORDERED.
/s/ Algenon L. Marbley
ALGENON L. MARBLEY
UNITED STATES DISTRICT JUDGE
DATED: September 28, 2016
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