Wise v. AutoNation, Inc. et al

Filing 21

MEMORANDUM ADOPTING 18 REPORT AND RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE. Defendants AutoNation, Inc. and Lewisville Imports, LTD's Motion to Set Aside Clerk's Entry of Default (Dkt. # 15 ) is GRANTED and the Clerk's Entry of Default (Dkt. # 13 ) is hereby set aside. Signed by District Judge Amos L. Mazzant, III on 8/17/2018. (rpc, )

United States District Court
EASTERN DISTRICT OF TEXAS
SHERMAN DIVISION

BRIDGET DENAE WISE
v.
AUTONATION INC., LEWISVILLE
IMPORTS, LTD., BANKSTON HONDA

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Civil Action No. 4:18-CV-44
(Judge Mazzant/Judge Nowak)

MEMORANDUM ADOPTING REPORT AND
RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE
Came on for consideration the report of the United States Magistrate Judge in this action,
this matter having been heretofore referred to the Magistrate Judge pursuant to 28 U.S.C. § 636.
On May 22, 2018, the report of the Magistrate Judge (Dkt. #18) was entered containing proposed
findings of fact and recommendations that Defendants AutoNation, Inc. and Lewisville Imports,
LTD’s Motion to Set Aside Clerk’s Entry of Default (Dkt. #15) be granted and the Clerk’s Entry
of Default be set aside. Having received the report and recommendation of the Magistrate Judge
(Dkt. #18), having considered Plaintiff’s objections (Dkt. #19), and having conducted a de novo
review, the Court is of the opinion that the Magistrate Judge’s report should be adopted.
BACKGROUND
Plaintiff filed suit on January 17, 2018, against Defendants AutoNation, Inc., Lewisville
Imports LTD, and Bankston Honda for race, gender, and disability status discrimination pursuant
to Title VII of the Civil Rights Act of 1964 (Dkt. #1). Plaintiff prepared service of process, and
summonses were issued to each of Defendants (Dkts. #5–#7). Returns of service were filed on
March 8, 2018 (Dkts. #9–#11). Defendants did not thereafter answer or otherwise respond.

On March 8, 2018, Plaintiff filed a Request for Clerk’s Entry of Default; Clerk’s Entry of
Default was entered against all Defendants March 8, 2018 (Dkts. #12, #13). On March 12, 2018,
Plaintiff filed “Supporting Documents for Default Judgement” (Dkt. #14). On March 15, 2018,
Defendants moved to set aside the Clerk’s Entry of Default (Dkt. #15). On the same day, Plaintiff
filed “Plaintiff(s) [sic] Entry of Unemployment Documents in Support for Default Judgement”
(Dkt. #16). On March 20, 2018, Plaintiff responded to Defendants’ Motion (Dkt. #17). On May
22, 2018, the Magistrate Judge entered a report and recommendation (Dkt. #18), recommending
that Defendants’ Motion to Set Aside Clerk’s Entry of Default (Dkt. #15) be granted and the
Clerk’s Entry of Default be set aside because Defendants had not yet been properly served. On
June 4, 2018, Plaintiff filed her “Plaintiff(s) [sic] Objection to the Magistrate Judge
Recommendation to Set Aside Clerk’s Entry of Default” (Dkt. #19).
PLAINTIFF’S OBJECTIONS
A party who files timely written objections to a magistrate judge’s report and
recommendation is entitled to a de novo review of those findings or recommendations to which
the party specifically objects. 28 U.S.C. § 636(b)(1)(C); Fed. R. Civ. P. 72(b)(2)–(3). Plaintiff
contends that the Magistrate Judge incorrectly found that: (1) Defendants’ failure to answer was
not willful; and (2) Plaintiff would not be prejudiced by setting aside default (Dkt. #19).
Excusable Neglect
Plaintiff objects that the Magistrate Judge was incorrect in finding that Defendants’ failure
to answer or otherwise respond was not willful. Plaintiff specifically argues that Defendants had
actual notice of the suit by virtue of Plaintiff’s email to Defendants. Plaintiff posits that Defendants
demonstrated willfulness by refusing to respond to her emails or the lawsuit after receipt of her
email (Dkt. #19 at pp. 1–2). Plaintiff further points out that the email reflects that “Legal Senior

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Vice President Coleman Edmunds was one of the recipients that received it” and “that same email
was also forwarded to Lance Iserman (EVP and COO) and Mike Johnson (CEO) later the exact
same day” (Dkt. #19 at p. 2). As noted by the Magistrate Judge, actual notice does not replace
proper service of process. See Kingman Holdings, LLC v. U.S. Bank Nat’l Ass’n, 2016 WL
1756508 (E.D. Tex. May 3, 2016) (“[a]ctual notice to a defendant, without proper service, is not
sufficient to convey upon the court jurisdiction to render default judgment against him”) (quoting
Wilson v. Dunn, 800 S.W.2d 833, 836 (Tex. 1990)).
Moreover, to set aside an entry of default, the court considers: “(1) whether the default
resulted from excusable neglect; (2) whether setting aside the entry of default. . . would prejudice
the adversary; and (3) whether a meritorious defense is presented.” Parker v. Bill Melton Trucking,
Inc., No. 3:15-CV-2528-G, 2016 WL 5704172, at *1 (N.D. Tex. Oct. 3, 2016) (citing CJC
Holdings, Inc. v. Wright & Lato, Inc., 979 F.2d 60, 64 (5th Cir. 1992)). The email in question,
sent by Plaintiff to Defendants, explicitly acknowledged that the Complaint had not yet been
served on Defendants, and also did not have attached to it a copy of the summons or Plaintiff’s
Complaint. See Goldstein v. Gordon, 2002 WL 324289, at *4–5 (N.D. Tex. February 27, 2002)
(the defendant’s receipt of an email from the plaintiff’s counsel telling him that a lawsuit had been
filed, but attaching no summons and complaint, did not constitute actual notice sufficient to prove
willfulness). As the Goldstein court noted, “Defendants were not required to scour the Court’s
records in order to locate and read a copy of the complaint filed against them” – as a publicly
traded company with over 300 affiliated dealerships nationwide, it would be impractical for
Defendants to do so. Id. at *5. As such, Defendants’ receipt of Plaintiff’s referenced email does
not indicate Defendants acted intentionally or negligently.

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Defendants provided additional evidence indicating that they were not negligent or
intentional regarding their failure to respond to the suit. As Defendants note in their Motion,
[t]o insure that deadlines are met, Defendants utilize Thomson Reuters Serengeti
Legal Tracker to manage all active litigation for its affiliated dealerships. However,
because Defendants were never served, the responsive pleadings deadline was
never set in Serengeti or calendared by counsel. . . Defendants were completely
unaware of any deadline to file a responsive pleading because they were never
properly served with process.
(Dkt. #15). Defendants’ failure to respond to the lawsuit does not reflect culpable conduct; it was
neither negligent or willful. Therefore, the default in this case resulted from excusable neglect.
Prejudice
Furthermore, excusable neglect is only one of the several factors courts consider to
determine whether there is good cause to set aside a default. Lacy v. Sitel Corp., 227 F.3d 290,
292 (5th Cir. 2000). Plaintiff also argues that the Magistrate Judge erred in finding that there was
“no indication that setting aside default at this juncture would prejudice Plaintiff”
(Dkt. #19 at p. 1). To support her assertion of prejudice, Plaintiff states only that “forcing [her] to
move forward” by proceeding on the merits rather than rendering a default judgment “will indeed
cause mental and physical harm to [her] personally, as well as a great prejudice towards [her]”
(Dkt. #19 at p. 3). This is insufficient. As the Fifth Circuit found in Lacy,
[t]here is no prejudice to the plaintiff where “the setting aside of the default has
done no harm to plaintiff except to require it to prove its case. It has decided
nothing against it except that it cannot continue to hold the sweeping [relief] it
obtained. . . without a trial and by default.”
227 F.3d at 293 (quoting Gen. Tel. Corp. v. Gen. Tel. Answering Serv., 277 F.2d 919, 921 (5th Cir.
1960)); see also Fazeli v. Dallas MTV, LLC, 2017 WL 1426334, at *3 (N.D. Tex. April 21, 2017)
(citing United States v. One Parcel of Real Prop., 763 F.2d 181, 183 (5th Cir. 1985)) (“Requiring
a plaintiff to litigate the merits of the claim is insufficient prejudice to allow a default to stand.”).

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Plaintiff has failed to allege sufficient facts that she would be prejudiced by having to proceed on
the merits. The Clerk’s Entry of Default should be set aside.
CONCLUSION
Having considered each of Plaintiff’s objections, and having conducted a de novo review,
the Court is of the opinion that the findings and conclusions of the Magistrate Judge are correct
and adopts the Magistrate Judge’s report (Dkt. #18) as the findings and conclusions of the Court.
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Accordingly, it is ORDERED that Defendants AutoNation, Inc. and Lewisville Imports,
LTD’s Motion to Set Aside Clerk’s Entry of Default (Dkt. #15) is GRANTED and the Clerk’s
Entry of Default (Dkt. #13) is hereby set aside.
IT IS SO ORDERED.
SIGNED this 17th day of August, 2018.

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AMOS L. MAZZANT
UNITED STATES DISTRICT JUDGE

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