H & C Corporation Inc v. Puka Creations LLC et al

Filing 23

ORDER granting 12 Motion to Set Aside Default; granting 13 Motion for Leave to File an Answer; denying 18 Motion for Default Judgment. Signed by Honorable R Bryan Harwell on 11/15/2012.(hcic, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF SOUTH CAROLINA
FLORENCE DIVISION
H & C Corporation, Inc.

)
)
Plaintiff,
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vs.
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Puka Creations, LLC and
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Robert Puka,
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Defendants.
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______________________________)

C.A. No.: 4:12-00013-RBH

ORDER

Pending before the Court are Defendants’ Motion to Set Aside Default, ECF No.12; Defendants’
Motion for Leave to File Answer, ECF No. 13; and Plaintiff’s Motion for Default Judgment, ECF No.
18.
The Court may set aside an entry of default pursuant to Rule 55(c) of the Federal Rules of Civil
Procedure on a showing of good cause. The rule should be construed liberally “to provide relief from
the onerous consequences of defaults and default judgments.” Lolatchy v. Arthur Murray, Inc., 816
F.2d 951, 954 (4th Cir. 1987) (quoting Tolson v. Hodge, 411 F.2d 123, 130 (4th Cir. 1969); Colleton
Preparatory Academy, Inc. v. Hoover Universal, Inc., 616 F.3d 413 (4th Cir. 2010). The primary
factors to consider when reviewing a motion to set aside default under Rule 55(c) are prejudice to the
non-moving party and whether the defendant has a meritorious defense. Central Operating Co. v.
Utility Workers of Am., AFL-CIO, 491 F.2d 245 (4th Cir. 1974). A meritorious defense is shown where
the moving party makes a presentation or proffer of evidence which, if believed, would permit the court
to find for the defaulting party. Moradi, 673 F.2d 725. The court may also consider whether or not the
moving party acts with reasonable promptness, the personal responsibility of the defaulting party, the
prejudice to the opposing party, whether there is a history of dilatory action, and the availability of less
drastic sanctions. Lolatchy, 816 F.2d at 953.

Considering this standard and after careful review of the arguments made by counsel for the
defendants, the Court finds that the defendants have shown good cause and that they should be granted
relief. The docket reflects that service was effected on the defendants on January 4, 2012 and that the
deadline for filing an answer was extended until March 23, 2012. Defendants have presented the
affidavit of their California attorney, Perry Clark, who states that he was negotiating with counsel for
the plaintiff between the time of service and March 23, 2012. In ¶ 12 of his affidavit, he further states:
I did not file an answer or otherwise plead in response to H&C’s complaint on March
23, 2012 because I had been working diligently to obtain the additional information
requested by Mr. Klett (plaintiff’s counsel) and I believed that I would be able to
provide it to him within a few days of March 23, 2012. Based on my prior discussions
with Mr. Klett, I believed that the information I was expecting to provide to him would
allow our discussions to move forward productively or, if not, that the parties could
agree on a date for Puka to respond to H&C’s complaint after H&C had a chance to
review the information provided by Puka.
(ECF No. 12-2, p.3).
The defendants have presented a potentially meritorious defense, that Plaintiff’s jewelry designs
were copies from the public domain, in Asia, where they had been available for many years prior to
Plaintiff’s claimed date of first publication. The defendants acted promptly to set aside the default by
motion filed on April 17, 2012, after being sent a copy of the request for entry of default on March 27,
2012. There is no showing of prejudice to the plaintiff other than delay in the prosecution of the lawsuit.
See Augusta Fiberglass Coatings, Inc. v. Fodor Contracting Corp., 843 F.2d 808, 812 (4th Cir.
1988)(“As to prejudice, we perceive no disadvantage to Augusta beyond that suffered by any party
which loses a quick victory.”) Interestingly, no request for preliminary injunctive relief has even been
filed. Here, the defendants bear no personal responsibility for the default, where they promptly retained
counsel to handle the matter.1 Less drastic sanctions are available in the form of an award of attorney’s

1

Plaintiff contends that the defendants failed to produce documentation to their attorney and
that they therefore bear personal responsibility for the default. The Court disagrees. In spite of any

fees. The Court finds that Defendants should pay Plaintiff’s attorney’s fees and costs in responding to
the defendants’ motion to set aside default and in preparing its motion for default judgment and reply.
The Court finds that the payment of fees and costs is equitable under the circumstances and is less
drastic than a default judgment.
Defendants’ Motion to Set Aside Default and Motion for Leave to File an Answer are
GRANTED. Plaintiff’s Motion for Default Judgment is DENIED. Defendants shall file their
responsive pleadings to the Complaint within seven (7) days of entry of this order. Additionally, the
Court directs Plaintiff’s counsel to file by November 26, 2012 an affidavit of fees and costs, including
his hourly rate. Any response to the amount requested should be filed by November 29, 2012.
AND IT IS SO ORDERED.

s/ R. Bryan Harwell
R. Bryan Harwell
United States District Court Judge
November 15, 2012
Florence, South Carolina

failure on the part of the defendants to provide documents to counsel, counsel still must bear the
responsibility for failing to file a timely Answer.