Dotson v. Energy Future Holdings Corp et al

Filing 31

ORDER denying 24 Motion for Leave to File Reply; granting 26 Motion for Leave to File Reply; denying 15 Motion for Entry of Default. Answer or Responsive Pleading due within 21 days. Signed by Honorable Timothy D. DeGiusti on 11/13/2017. (mb)

IN THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF OKLAHOMA
VANCE DOTSON,
Plaintiff,
v.
ENERGY FUTURE HOLDINGS
CORP. d/b/a TXU ENERGY, et al.,
Defendants.

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Case No. CIV-17-575-D

ORDER
The present matter arises on Plaintiff’s Motion for Entry of Default [Doc. No. 15],
TXU Energy Defendants’ Amended Motion for Leave to File Objection to Entry of Default
[Doc. No. 24], and TXU Energy Defendants’ Motion for Leave to File Answer or Other
Responsive Pleading [Doc. No. 26]. For the following reasons, the Court grants TXU
Energy Defendants’ Motion for Leave to File Answer or Other Responsive Pleading [Doc.
No. 26] out of time.
FACTUAL BACKGROUND
Plaintiff filed this action on May 19, 2017, against 16 defendants, alleging multiple
violations of the Fair Credit Reporting Act (“FCRA”). [Doc. No. 1]. TXU Energy
Solutions Management Company LLC, TXU Energy Industries Company and TXU
Energy Services LLC were served with a copy of the Complaint on June 2, 2017 [Doc.

Nos. 5-7].1 On June 21, 2017, Lyle R. Nelson, counsel of record for Energy Future
Holdings Corporation (“EFH”) and TXU Energy Defendants, filed a Notice of Bankruptcy
[Doc. No. 11]. The Notice requested the Court stay proceedings with respect to all
Defendants, except Experian, during the pendency of bankruptcy proceedings involving
EFH. [Doc. No. 11]. Plaintiff filed a response in opposition [Doc. No. 12], asserting that
the instant action was not one that could have commenced prior to EFH’s filing of
bankruptcy.
On June 27, 2017, Plaintiff filed a Notice of Voluntary Dismissal [Doc. No. 14],
dismissing EFH, TXU Energy Retail Company LLC, and TXU Energy Solutions Company
LLC. On June 30, 2017, Plaintiff filed a Motion for Entry of Default [Doc. No. 15] against
TXU Energy Solutions Management Company LLC, TXU Energy Industries Company
and TXU Energy Services Company LLC.
The Court entered an Order [Doc. No. 22] on September 19, 2017, concluding that
11 U.S.C. § 362(a)(1) did not operate to stay Plaintiff’s claims against Defendants.
Subsequently, and out of time, TXU Energy Defendants filed their Amended Motion for
Leave to File Objection to Entry of Default [Doc. No. 24] and Motion for Leave to File
Answer or Other Responsive Pleading [Doc. No. 26]. Plaintiff responded in opposition
[Doc. Nos. 25, 28].

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Experian Information Solutions, Inc. (“Experian”) was served on May 30, 2017 [Doc.
No. 4], and filed an Answer on June 20, 2017 [Doc. No. 9]. The record reflects that the
remaining Defendants have not been served.
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ANALYSIS
No default has been entered; therefore, the appropriate standard is whether the Court
should extend the time for TXU Energy Defendants to answer or file a responsive pleading
pursuant to FED. R. CIV. P. 6(b)(1)(B). Rule 6(b)(1)(B) provides that “When an act may or
must be done within a specified time, the court may, for good cause, extend the time on
motion made after the time has expired if the party failed to act because of excusable
neglect.” (emphasis added).
The determination of whether neglect is excusable “is at bottom an equitable one,
taking account of all relevant circumstances surrounding the party’s omission.” Pioneer
Inv. Services Co. v. Brunswick Associates Ltd. P’ship, 507 U.S. 380, 395 (1993). The
circumstances to be considered include “[1] the danger of prejudice to the [nonmoving
party], [2] the length of the delay and its potential impact on judicial proceedings, [3] the
reason for the delay, including whether it was within the reasonable control of the movant,
and [4] whether the movant acted in good faith.” United States v. Torres, 372 F.3d 1159,
1162 (10th Cir. 2004) (quoting Pioneer Inv. Services Co., 507 U.S. at 395); see also Panis
v. Mission Hills Bank, 60 F.3d 1486, 1494 (10th Cir. 1995). The reason for the delay in
filing the answer is “a very important factor – perhaps the most important single factor ….”
Torres, 372 F.3d at 1163.
TXU Energy Defendants contend that they have been responsive, but that they have
refrained from filing responsive pleadings in order to alleviate confusion as to which court
has proper jurisdiction [Doc. Nos. 24, 26]. They further highlight the unique case history
and complex procedural issues involved due to the ancillary bankruptcy proceedings.
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Plaintiff, on the other hand, focuses his argument on TXU Energy Defendants’ failure to
follow the Federal Rules of Civil Procedure and the Court’s Local Rules [Doc. Nos. 25,
28].
After considering these factors, the Court finds that TXU Energy Defendants should
be granted additional time to answer. The Court notes that there is a strong preference for
resolution of cases on their merits, rather than resolution based on some procedural misstep.
Moreover, the Court is mindful of the fact that a denial of additional time here would
necessarily lead to entry of default. As the Tenth Circuit has noted, default judgments are
“a harsh sanction.” M.E.N. Co. v. Control Fluidics, Inc., 834 F.2d 869, 872 (10th Cir. 1987).
Defaults are not favored. See H.F. Livermore Corp. v. Aktiengesellschaft Gebruder Loepfe,
432 F.2d 689, 691 (D.C. Cir. 1970) (“the default judgment must normally be viewed as
available only when the adversary process has been halted because of an essentially
unresponsive party.”); Cessna Finance Corp. v. Bielenberg Masonry Contracting, Inc., 715
F.2d 1442, 1444 (10th Cir. 1983) (“We do not favor default judgments because the court’s
power is used to enter and enforce judgments regardless of the merits of the case, purely
as a penalty for delays in filing or other procedural error.”).
Neither Plaintiff nor TXU Energy Defendants convincingly argue that they have or
have not been prejudiced. TXU Energy Solutions Management Company LLC, TXU
Energy Industries Company and TXU Energy Services LLC were served with a copy of
the Complaint on June 2, 2017 [Doc. Nos. 5-7]. Pursuant to FED. R. CIV. P. 12(a)(1)(A)(i),
their time to file an answer to Plaintiff’s Complaint expired on June 23, 2017. Although
these three defendants did not file an answer prior to that date, counsel did file a Notice of
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Bankruptcy [Doc. No. 11], requesting the Court stay proceedings with respect to all
Defendants, except Experian, during the pendency of bankruptcy proceedings involving
EFH. The Court did not rule on the motion until September 19, 2017 [Doc. No. 22].
Shortly thereafter, TXU Energy Defendants sought leave from the Court to file an answer
and respond to Plaintiff’s Motion for Entry of Default out of time [Doc. Nos. 24, 26]. See
Moore v. City of Tulsa, Case No. CIV-14-152-CVE, 2014 WL 6836216, at *3 (N.D. Okla.
Dec. 3, 2014) (finding five-month delay in filing answer had no impact on judicial
proceedings where defendant had appeared and defended the case by filing and responding
to motions, which weighed in favor of finding excusable neglect).
Plaintiff does not argue that this delay will seriously affect the judicial proceedings.
No scheduling order is in place, and no other court action has occurred. Moreover, counsel
for TXU Energy Defendants has appeared and defended the case by filing various motions
and notices with the Court. Therefore, this factor weighs in favor of TXU Energy
Defendants.
The reason for the delay is often the decisive factor in determining excusable
neglect. Torres, 372 F.3d at 1163. “[I]nadvertence, ignorance of the rules, and mistakes
construing the rules do not constitute excusable neglect for purposes of Rule 6(b).” Quigley
v. Rosenthal, 427 F.3d 1232, 1238 (10th Cir. 2005). Excusable neglect is an elastic standard
that is not limited to actions outside the control of the moving party. Pioneer Inv. Services
Co., 507 U.S. at 392. If the Court had adopted TXU Energy Defendants’ position regarding
the stay, then TXU Energy Defendants would not have had to file an answer to Plaintiff’s
Complaint during the duration of the stay. After the Court ruled against TXU Energy
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Defendants on this issue [Doc. No. 22], TXU Energy Defendants promptly sought leave
from the Court to file an answer out of time. The Court finds that TXU Energy Defendants
have demonstrated a valid reason for the delay.
Finally, the last factor is whether the movant acted in good faith. Plaintiff offers no
evidence of bad faith.
CONCLUSION
For the foregoing reasons, TXU Energy Defendants’ Motion for Leave to File
Answer or Other Responsive Pleading [Doc. No. 26] is GRANTED. The Court directs
TXU Energy Defendants to answer or otherwise respond to Plaintiff’s Complaint within
21 days from the date of this Order. This Order moots Plaintiff’s Motion for Entry of
Default [Doc. No. 15] and TXU Energy Defendants’ Amended Motion for Leave to File
Objection to Entry of Default [Doc. No. 24]; therefore, those motions are DENIED.
IT IS SO ORDERED this 13th day of November 2017.

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