Davis v. State Farm Life Insurance Company

Filing 33

ORDER granting 28 MOTION to Set Aside Default filed by Vernond Davis. Signed by Honorable Joseph F Anderson, Jr on 05/17/2010. (bshr, )

IN THE UNITED STATES DISTRICT COURT F O R THE DISTRICT OF SOUTH CAROLINA C O L U M B IA DIVISION V e rn o n d Davis, individually and as p a r e n t of M. Davis and Z. Davis, P l a i n t if f s , vs. S ta te Farm Life Insurance Company, D e f e n d a n t. ) ) ) ) ) ) ) ) ) ) ) C / A No.: 3:10-372-JFA

ORDER

T h is matter comes before the court on the motion of plaintiff Vernond Davis (" D a v is " ) to set aside the clerk's entry of default. The motion was fully briefed and the p arties presented oral argument to the court at a May 14, 2010 hearing, where the court g ra n ted Davis's motion. This order serves to memorialize the ruling of the court. I. B a c k g ro u n d T h is action concerns Davis's alleged entitlement to benefits under a life insurance p o lic y (the "Policy") issued by defendant State Farm Life Insurance Company ("State F a rm " ). Davis filed suit against State Farm on January 26, 2010, in the court of common p lea s for Sumter County, South Carolina, and State Farm thereafter removed the action to fe d era l court on the basis of diversity jurisdiction. On February 18, 2010, State Farm a n sw e re d the complaint and asserted a counterclaim for declaratory judgement seeking a d e c la ra tio n that State Farm is entitled to void the Policy on the grounds of misrepresentation. D a v is failed to reply to the counterclaim and State Farm moved for default, which was

e n te re d . Davis now moves to set aside the clerk's entry of default. II. D is c u ss io n A. D a v is's Motion to Set Aside Default

S tate Farm moved for default judgment pursuant to Rule 55(b)(2) on its declaratory ju d g m e n t claim. The clerk thereafter made its entry of default. State Farm now contends that th e clerk's entry of default effected a default judgment pursuant to Rule 55(b)(2) and not s i m p ly an entry of default pursuant to Rule 55(a), because that was the relief State Farm s o u g h t in its original motion. However, where the claim is not a liquidated sum and the other s id e has appeared, only the court may enter default judgment and then only after seven days' n o tic e to the other side. See Fed. R. Civ. P. 55(b)(2). Accordingly, Davis's motion to set a sid e entry of default should be considered under the good cause standard of Rule 55(c) and n o t the excusable neglect standard of Rule 60(b). T h e Fourth Circuit has found that "justice demands that a blameless party not be d isad v an tag e d by the errors or neglect of his attorney which cause a final, involuntary term ination of proceedings." United States v. Moradi, 673 F.2d 725, 728 (4th Cir. 1982). T o that end, relief from entry of default is appropriate when the moving party is able to allege a meritorious defense and acts with reasonable promptness. Lolatchy v. Arthur Murray, Inc., 8 1 6 F.2d 951, 953 (4th Cir. 1987). In addition, when considering whether to set aside default t h e court should consider: (1) the personal responsibility of the defaulting party, (2) the p re ju d ic e to the opposing party, (3) whether there is a history of dilatory action, and (4) the

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a v a ila b ility of sanctions less drastic. Id. In considering these factors, the court is cognizant o f the "`the extensive line of decisions' that have held that Federal Rule of Civil Procedure 5 5 (c ) must be `liberally construed to provide relief from the onerous consequences of d e f a u lts and default judgments.'" Id. at 954. Here, Davis moved to set aside default after 25 days, which the court finds reasonably p ro m p t under the circumstances of the case. Davis also contends that the two-year statute o f limitations governing challenges to insurance policies provides him a meritorious defense. S e e S.C. Code Ann. § 38-63-220(d). As such, Davis appears to assert a colorable defense. T u rn in g to the additional facts the court is required to address by Moradi and Lolatchy, the re c o rd suggests (1) no personal fault on the part of Davis, (2) little to no prejudice to State F a r m , (3) little history of dilatory action, and (4) the availability of less drastic sanctions. III. C o n c lu s io n I n conclusion, the factors for consideration weigh in favor of Davis, as does the F o u rth Circuit policy favoring disposition of claims on their merits. Accordingly, the court g ra n ts Davis's motion to set aside default. Dkt. No. 28. IT IS SO ORDERED.

M ay 17, 2010 C o lu m b ia , South Carolina

J o s e p h F. Anderson, Jr. U n ite d States District Judge

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