Jewish Association on Aging/Charles Morris Nursing & Rehabilitation Center v. Dallas

Filing 39

MEMORANDUM re First Mtn for Relief from Judgment 31 and Order on Mtn for Default Judgment 30 (Order to follow as separate docket entry)Signed by Honorable Sylvia H. Rambo on 8/25/16. (ma)

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
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Plaintiff,
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v.
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THEODORE DALLAS, In his official :
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capacity as the Secretary of the
Pennsylvania Department of Human :
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Services,
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Defendant.
JEWISH ASSOCIATION ON
AGING/CHARLES MORRIS
NURSING & REHABILITATION
CENTER, as assignee and/or
authorized representative of Lee Read
and Eugene Schreiber,

Civ. No. 1:15-CV-1809

Judge Sylvia H. Rambo

MEMORANDUM
Plaintiff initiated this action by filing a complaint on September 17,
2015. (Doc. 1.) The complaint was not served upon Defendant, however, until
March 11, 2016. (Doc. 23.) On July 11, 2016, Plaintiff filed a motion for entry of
default judgment (Doc. 24), but was instructed by the court to first file a motion for
entry of default (Doc. 25). Plaintiff filed two motions for entry of default, one on
August 2, 2016 and the second on August 12, 2016. (Docs. 26 & 27.) On August
12, 2016, Plaintiff also filed a motion for entry of default judgment (Doc. 28), and
the court granted Plaintiff’s motions and entered default judgment on August 15,
2016 (Doc. 30).

On August 19, 2016, Defendant filed a motion for relief from the default
judgment, asserting that the lead attorney at the Pennsylvania Department of
Human Services (“DHS”) took a leave of absence due to family medical issues
shortly after the complaint was served, causing it to be overlooked and not
reassigned to a different attorney, and that DHS never received Plaintiff’s motions
for default as they were mailed to a post office box rather than the DHS office.
(See Doc. 31.) A telephonic hearing regarding Defendant’s motion was held on
August 24, 2016.
I.

Legal Standard
“A court may set aside entry of default for good cause,” World Entm't Inc.

v. Brown, 487 F. App'x 758, 761 (3d Cir. 2012) (citing Fed. R. Civ. P. 55(c)), and
such a determination is “within the sound discretion of the district court.” Johnson
v. Roskosci, Civ. No. 15-cv-1232, 2016 WL 127843, *1 (M.D. Pa. Jan. 12, 2016)
(citing F.C. Intrieri Const. Co. v. Patel, Civ. No. 12-cv-0361, 2012 WL 2052682,
*1 (M.D. Pa. June 7, 2012) (then citing Dambach v. United States, 211 F. App'x
105, 109 (3d Cir. 2006)). In determining whether to set aside an entry of default,
the court must consider:
(1) whether plaintiff will be prejudiced; (2) whether the defendant has
a meritorious defense, that is, whether the defendant's allegations, if
established at trial, would constitute a complete defense to the action;
and (3) whether the default was the result of defendant's culpable
conduct.
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Dambach, 211 F. App'x at 109 (citing United States v. $55,518.05 in U.S.
Currency, 728 F.2d 192, 195 (3d Cir. 1984)). Although motions to vacate entry of
default are held to a more lenient standard, the factors to consider are the same as
with motions to vacate entry of default judgment. See Nat'l Specialty Ins. Co. v.
Papa, Civ. No. 11-cv-2798, 2012 WL 868944, *2 (D.N.J. Mar. 14, 2012) (citing
Feliciano v. Reliant Tooling Co., Ltd., 691 F.2d 653, 656 (3d Cir. 1982)). Courts
do “not favor entry of defaults or default judgments,” Hill v. Williamsport Police
Dept., 69 F. App’x 49, 51 (3d Cir. 2003), and “[a]ny doubt should be resolved in
favor of setting aside the default and reaching a decision on the merits.” PTD
Enters., LLC v. Hosp. Trade Program, LLC, 2015 WL 1893152, *2 (M.D. Pa. Apr.
24, 2015) (citing Gross v. Stereo Component Sys., Inc., 700 F.2d 120, 122 (3d Cir.
1983)).
II.

Discussion
Defendant asserts that an unintentional and unforeseen medical emergency

with the lead attorney at DHS caused the defense of this action to “slip through the
cracks.” Plaintiff filed both its motion for entry of default and its motion for entry
of default judgment on August 12, 2016, and Defendant filed its motion to set them
aside on August 19, 2016. It is through this lens that the court will consider the
relevant factors for setting aside the entry of default and default judgment.

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A.

Whether Plaintiff Will Suffer Prejudice

A party is prejudiced by the setting aside of a default judgment where
“circumstances have changed since entry of the default such that plaintiff’s ability
to litigate its claim is now impaired in some material way or if relevant evidence
has become lost or unavailable.” Accu-Weather, Inc. v. Reuters, Ltd., 779 F. Supp.
801, 802 (M.D. Pa. 1991). Here, Plaintiff has not argued that it has suffered any
real prejudice, and the court cannot envision that any change in circumstances or
loss of evidence occurred in the lone week between the entry of default and
Defendant’s motion. Thus, this factor weighs in favor of vacating the default.
B.

Whether Defendant Has a Meritorious Defense

A meritorious defense is accomplished where a defendant alleges facts that
“if established on trial, would constitute a complete defense to the action.”
$55,518.04 in U.S. Currency, 728 F.2d at 194-95 (citation omitted). “While a
defendant need not establish ‘beyond a shadow of a doubt’ that he or she will
prevail at trial,” Paradise v. Com. Fin. Sys., Inc., Civ. No. 13-cv-0001, 2014 WL
4717966, *2 (M.D. Pa. Sept. 22, 2014) (quoting Ewing & Kreiser, P.C. v.
Stephens, Civ. No. 08-cv-5490, 2009 WL 1183347, * (E.D. Pa. May 1, 2009)), a
defendant must “show that it has a defense to the action which at least has merit on
its face.” Id. (quoting Accu-Weather, Inc., 779 F. Supp. at 803). Here, Defendant
has alleged that Plaintiff’s claim that DHS failed to provide timely and adequate
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notices of the discontinuation of Medicaid benefits to the beneficiaries will
ultimately fail because the notices were in fact sent, and Defendant attached the
notices to its motion to set aside default. The court finds that Defendant has
established a meritorious defense, and, accordingly, this factor weighs in favor of
vacating the default.
C.

Whether Defendant’s Conduct Was Culpable

“A defendant's conduct in failing to defend an action is culpable when it acts
‘willfully’ or in ‘bad faith.’” Davis v. Metro. Life Ins. Co., Civ. No. 13-cv-2741,
2015 WL 574616, *8 (M.D. Pa. Feb. 11, 2015) (citing Chamberlain v. Giampapa,
210 F.3d 154,164 (3d Cir. 2000)). “Mere negligence does not constitute culpable
conduct.” Id. (citing Hritz v. Woma Corp., 732 F.2d 1178, 1183 (3d Cir. 1984)).
Here, the conduct of counsel for Defendant is most certainly negligent. It is
difficult for the court to fathom how a state agency such as DHS, which employs
several attorneys and handles numerous litigation matters, could allow an error of
this magnitude to occur. The complaint was served on DHS nearly six months
ago, and their motion to vacate the default, rather than any form of responsive
pleading, was the first document they filed in this case. Nonetheless, counsel did
not engage in any bad faith or willful conduct. The delay in responding appears to
be a genuine mistake, rather than a litigation tactic or scheme to make evidence

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unavailable. Thus, the court finds that this factor also weighs in favor of setting
aside the default.
III.

Conclusion
Based on the foregoing, the court finds that Defendant’s delay in responding

to this litigation has not caused any prejudice to Plaintiff, Defendant has put
forward a meritorious defense, and Defendant did not engage in any culpable
conduct. These findings, coupled with the court’s preference for resolving disputes
upon their merits rather than procedural technicalities, compels the court to set
aside the entries of default and default judgment, and Defendant’s motion will be
granted.
An appropriate order will issue.

s/Sylvia H. Rambo
SYLVIA H. RAMBO
United States District Judge
Dated: August 25, 2016

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