RUGGIERO v. MORAVIAN COLLEGE
Filing
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ORDER THAT PLAINTIFFS 5 MOTION FOR DEFAULT JUDGMENT IS DENIED. DEFENDANT SHALL FILE AN ANSWER TO THE COMPLIANT WITHIN FOURTEEN DAYS OF THE DATE OF THIS ORDER. SIGNED BY HONORABLE JOSEPH F. LEESON, JR ON 10/10/18. 10/11/18 ENTERED AND COPIES E-MAILED.(mas, )
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF PENNSYLVANIA
_____________________________________
JACLYN RUGGIERO,
LORRAINE RUGGIERO, and
JOSEPH RUGGIERO
:
:
:
:
Plaintiffs,
:
v.
:
:
MORAVIAN COLLEGE,
:
:
Defendant.
:
_____________________________________
No. 5:18-cv-1236
OPINION AND ORDER
Plaintiffs’ Motion for Default Judgment, ECF No. 5—Denied
Joseph F. Leeson, Jr.
United States District Judge
October 10, 2018
Plaintiffs Jaclyn, Lorraine, and Joseph Ruggiero have moved for a default judgment after
Defendant Moravian College failed to respond to their Complaint. For the reasons discussed
below, Plaintiffs’ motion is denied, and this case will proceed on the merits.
I.
BACKGROUND
Plaintiffs filed their Complaint on March 23, 2018, ECF No. 1, alleging breach of
contract, negligent misrepresentation, violations of Section 504 of the Rehabilitation Act, 29
U.S.C. § 794, and violations of Title III of the Americans with Disabilities Act, 42 U.S.C. §§
12181-12189, based upon Defendant’s failure to accommodate Plaintiff Jaclyn Ruggiero’s
disability when she was a student at Moravian College.
Defendant did not respond to the Complaint, and this Court entered a notice of default,
instructing Plaintiffs that failing to have a default entered under Rule 55(a) could result in the
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case being dismissed for lack of prosecution. ECF No. 4. Instead of obtaining a default from the
Clerk of Court, though, Plaintiffs filed the present Motion for Default Judgment. ECF No. 5.
Defendant responded six days later and presented its explanation for its failure to answer
the Complaint, which centers around communication issues between Defendant’s defense
attorneys and its insurer. ECF No. 6. According to Defendant’s response and the attached
affidavit, Blake C. Marles, an attorney with Stevens & Lee, P.C., counsel for Moravian College,
learned of Plaintiffs’ Complaint on March 27, 2018, when he checked this Court’s electronic
dockets. On April 6, 2018, counsel for Plaintiffs contacted Marles and asked if he would accept
service; Marles responded on April 11 that he would accept service, but asked that Plaintiffs wait
an additional two weeks because he did not know whether Defendant’s insurer had assigned
Stevens & Lee to defend the case.
Defendant’s insurer told Marles on April 19, 2018, that the insurer would defend the case
itself. Marles received the Complaint from Plaintiffs on April 25, 2018, and returned an executed
waiver of summons. ECF No. 3. Marles forwarded the Complaint to Defendant and the insurer
the next day. Marles received no further communications from the insurer and concluded that the
insurer had assigned the case to another law firm.
Plaintiffs filed the present Motion on July 6, 2018, and their counsel emailed a copy to
Marles. Realizing that the insurer had not assigned the case to another law firm, Marles
contacted the insurer on July 9, 2018, 1 and the insurer assigned the case to Stevens & Lee.
1
Plaintiffs point out in their reply that Defendant’s response states that Marles contacted
the insurer on July 9, whereas his affidavit states that he contacted the insurer on July 6. Pls.’
Reply 1 n.1, ECF No. 7. This Court does not find this discrepancy meaningful.
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II.
ANALYSIS
As an initial matter, this Court cannot grant Plaintiffs’ motion for default judgment
because Plaintiffs have not yet requested or obtained an entry of default against Defendant by the
Clerk of Court under Federal Rule of Civil Procedure 55(a). See Husain v. Casino Control
Comm’n, 265 F. App’x 130, 133 (3d Cir. 2008) (holding that district court correctly denied
motion for default judgment where no default had been entered); Limehouse v. Delaware, 144 F.
App’x 921, 923 (3d Cir. 2005) (same); Olivia B. ex rel. Bijon B. v. Sankofa Acad. Charter Sch.,
No. CIV.A. 14-867, 2014 WL 3855441, at *3 (E.D. Pa. Aug. 6, 2014) (“Plaintiffs’ failure to
follow the proper procedure is fatal to the instant Motion for Default Judgment.”).
Regardless, even on the merits, default judgment is inappropriate. The Third Circuit
Court of Appeals requires a district court ruling on a motion for default judgment to balance
three factors: (1) whether the plaintiff will be prejudiced if the default is denied, (2) whether the
defendant appears to have a meritorious defense; and (3) whether the default was the product of
defendant’s culpable conduct. Chamberlain v. Giampapa, 210 F.3d 154 (3d. Cir. 2000) (citing
United States v. $55,518.05 in U.S. Currency, 728 F.2d 192, 195 (3d. Cir. 1984)). Any doubts
should be resolved against default and in favor of reaching a decision on the merits. Gross v.
Stereo Component Systems, Inc., 700 F.2d 120, 122 (3d Cir. 1983).
Plaintiffs have not established that they will suffer prejudice if this Court does not enter a
default judgment. “Delay in realizing satisfaction on a claim rarely serves to establish the degree
of prejudice sufficient to prevent the opening [of] a default judgment entered at an early stage of
the proceeding.” Nationwide Mut. Ins. Co. v. Starlight Ballroom Dance Club, Inc., 175 F. App’x
519, 523–24 (3d Cir. 2006) (citing Feliciano v. Reliant Tooling Co., 691 F.2d 653, 656–57 (3d
Cir. 1982)); see also Gov’t Employees Ins. Co. v. Pennsauken Spine & Rehab P.C., No.
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CV1711727RBKKMW, 2018 WL 3727369, at *5 (D.N.J. Aug. 6, 2018) (applying Nationwide
Mut. Ins. Co. to motion for default judgment). Plaintiffs argue that further delay in the resolution
of this case will hinder their ability to discover evidence because various potential witnesses no
longer work at Moravian College. Mot. 8. However, although Plaintiffs suggest that the passage
of time might make contacting potential witnesses and discovering relevant evidence more
difficult, they offer no reason to believe that the evidence will become unavailable or that they
will otherwise be unable to make their case. Plaintiffs also argue that additional delay in recovery
will allow interest on Plaintiff Jaclyn Ruggiero’s student loans to accrue for longer and thus
increase the extent of Plaintiffs’ damages. Id. However, a future damages award could
compensate Plaintiffs fully for additional student loan interest accrued; Plaintiffs present no
argument to the contrary. Therefore, the first factor weighs against default judgment.
With respect to the second factor, Defendant has not established a meritorious defense.
“The showing of a meritorious defense is accomplished when allegations of defendant’s answer,
if established at trial, would constitute a complete defense to the action.” $55,518.05 in U.S.
Currency, 728 F.2d at 195 (internal quotations and citation omitted). In this case, though,
Plaintiffs point out that Defendant has not raised any specific factual defenses in its brief in
opposition to the motion. Reply 3. Indeed, Defendant asserts only that it will answer and dispute
many factual averments central to the issues. Def.’s Opp. 4, ECF No. 6. Nor has Defendant filed
a copy of its proposed answer that would allow this Court to evaluate its planned defenses.
If Defendant were seeking to vacate a default judgment instead of opposing the entry of a
default judgment, its case would fail at this point, because a party seeking to vacate a default
judgment must show as “the threshold question” that it can establish a meritorious defense. Cent.
W. Rental Co. v. Horizon Leasing, 967 F.2d 832, 836 (3d Cir. 1992). Courts apply a more lenient
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standard to motions to vacate an entry of default than to motions to vacate a default judgment.
See Feliciano v. Reliant Tooling Co. Ltd., 691 F.2d 653, 656 (3d Cir. 1982) (“Less substantial
grounds may be adequate for setting aside a default than would be required for opening a
judgment.”). As a result, many courts within the Third Circuit, “while recognizing that lack of a
meritorious defense is, by itself, dispositive in the motion to vacate default judgment context,
[have] been reluctant to similarly hold in the entry of default context.” Nat’l Specialty Ins. Co. v.
Papa, No. CIV. 11-2798 RMB/KMW, 2012 WL 868944, at *2 (D.N.J. Mar. 14, 2012)
(collecting cases). Those courts weigh the defaulting party’s failure to raise a meritorious defense
alongside the other Chamberlain factors. 2 See, e.g., Aguiar v. Recktenwald, No. CIV.A. 3:132616, 2014 WL 1653187, at *5 (M.D. Pa. Apr. 24, 2014) (denying default judgment even though
defendants had not filed a response to the complaint outlining their defenses, because “courts in
this circuit seem unwilling to deny the motion to set aside entry of default solely on the basis that
no meritorious defense exists”); Paris v. Pennsauken Sch. Dist., No. CIV. 12-7355 NLH/JS,
2013 WL 4047638, at *3 (D.N.J. Aug. 9, 2013) (concluding that “Defendants have not indicated
to the Court that they would be entitled to any meritorious defenses, let alone offered specific
facts in support of any such defenses,” but granting motion to vacate entry of default); Allstate
2
The United States District Court for the District of New Jersey in Papa identified another
line of district court decisions in the Third Circuit that denied motions to vacate entries of default
when defendants did not demonstrate a meritorious defense, but allowed an additional
opportunity to establish a defense. Papa, 2012 WL 868944, at *2 (collecting cases). The Papa
court followed this approach because “[t]he greater leniency afforded movants in the entry of
default context cannot entirely excuse their obligation to present a meritorious defense,” and
allowed the defendant thirty days to present meritorious defenses. Id. at *3. This Court does not
follow this approach because this case is at an even earlier stage than Papa—as discussed above,
Plaintiffs have not even obtained an entry of default.
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Ins. Co. v. Hopfer, No. CIV.A.08-4549, 2009 WL 1362612, at *3 (E.D. Pa. May 14, 2009)
(observing that “[c]ourts in this district have held that the failure to present a meritorious defense
is not necessarily fatal” and vacating entry of default). Therefore, the second factor weighs in
favor of default or, at best, is neutral. See Gross v. Weinstein, Weinburg & Fox, LLC, No. CV 14786-LPS, 2017 WL 5714001, at *3 (D. Del. Nov. 28, 2017) (finding second factor inconclusive
where defendant’s motion to set aside default judgment did not indicate what defense defendants
intended to put forth and asserted only a factual dispute concerning liability).
As was the case in Paris, the “crux” of Defendant’s argument is the third factor, whether
the default resulted from culpable conduct by the Defendant. Defendant attributes its failure to
respond to the Complaint to a “communication breakdown” between Marles and its insurance
carrier with respect to who was responsible for defending the case. Opp. 5. In this regard, this
case resembles the factual scenario in Paris, where the defendant school district’s delay in
responding to the complaint resulted from communication issues among the defendant, its
counsel, and its insurer. 2013 WL 4047638, at *4. In Paris, the defendant received the complaint
before the school district’s winter break and, when school began again, the employee responsible
for contacting counsel and the insurer was out sick. Id. When the employee returned, the school
district contacted the insurer, but had to wait until the insurer agreed to afford a defense. Id.
When it did, the school district retained counsel immediately. Id. The court found that, although
perhaps negligent, the defendant’s actions were not “flagrant or committed in bad faith,” and
thus the third factor weighed against default. Id.
Like the defaulting party in Paris, Defendant alleges that the failure to respond resulted
from the insurer’s delay in deciding who would defend the case. Marles believed that
Defendant’s insurer had assigned the case to another firm, so he took no action between April 26
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and July 6. The Third Circuit has excused similar failures to respond resulting from a lack of
clarity about who represents the defaulting party. See Zawadski de Bueno v. Bueno Castro, 822
F.2d 416, 420–21 (3d Cir. 1987) (excusing counsel’s failure to respond when complaint was
mailed directly to foreign counsel, who forwarded complaint to local counsel with vague and
limited instructions, and local counsel received unclear reply to his attempt to clarify his role);
Gross v. Stereo Component Systems, Inc., 700 F.2d 120, 122 (3d Cir. 1983) (excusing failure to
respond to complaint resulting from “serious breakdown in communication” between
defendant’s local counsel in Philadelphia and general counsel in Boston with respect to who was
defending the case). Plaintiffs fault Marles for his inaction and seem to suggest that because he
had a habit of checking this Court’s electronic dockets (which led to his original discovery of the
Complaint), he should have recognized that no attorney had entered an appearance for Defendant
and followed up with Defendant or its insurer as to the status of the case. Reply 6. Even
accepting at face value Plaintiffs’ argument that Marles should have done more, courts do not
impute counsel’s activity or inactivity to their clients. See Gov’t Employees Ins. Co., 2018 WL
3727369, at *5.
Plaintiffs also complain that Defendant did not take a more proactive approach but
instead took no action between March 27 and July 6. Reply 6. However, Plaintiffs do not show
that Defendant’s inaction resulted from anything more than reliance on its insurer to retain
counsel and defend the case. At best, Plaintiffs can show that Defendant acted negligently, but
negligence does not establish culpable conduct. As a result, the third factor weighs against entry
of default.
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Upon consideration of the Chamberlain factors, this Court concludes that entry of a
default judgment is not appropriate. Accordingly, Plaintiffs’ motion is denied, and this case will
proceed on the merits.
III.
ORDER
ACCORDINGLY, for the reasons expressed above, IT IS ORDERED THAT:
1. Plaintiffs’ Motion for Default Judgment is DENIED.
2. Defendant shall file an answer to the Compliant within fourteen days of the date of this
order.
BY THE COURT:
/s/ Joseph F. Leeson, Jr.___________
JOSEPH F. LEESON, JR.
United States District Court
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