Joe Hand Promotions, Inc. v. Valdez et al

Filing 15

MEMORANDUM OPINION AND ORDER granting 12 Defendants' Motion to Set Aside Default and for Leave to File Answer. Accordingly, the court sets aside the default entered by the clerk on 6/28/2013, and Defendants shall file an answer or otherwise respond by 1/10/2014. (Ordered by Judge Sam A Lindsay on 1/3/2014) (skt)

IN THE UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
JOE HAND PROMOTIONS, INC.,
Plaintiff,
v.
LAGENE VALDEZ, Individually, and as
an officer, director, shareholder, and/or
principal of Janico Enterprises, LLC d/b/a
Timeout Café Sports Bar 10474 Country
View Lane, Forney, TX 75126;
JANICO ENTERPRISES, LLC d/b/a
Timeout Café Sports Bar 104 e. US Hwy.
80 #120, Forney, TX 75126; and
TIMEOUT HOSPITALITY CLUB d/b/a
Timeout Café Sports Bar 104 E. US Hwy.,
80 #120 Forney, TX 75126,
Defendants.

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Civil Action No. 3:13-CV-1679-L

MEMORANDUM OPINION AND ORDER
Before the court is Defendants’ Motion to Set Aside Default Judgment1 and for Leave to
File Answer, filed July 8, 2013. After careful consideration of the motion, response, record, and
applicable law, the court grants Defendants’ Motion to Set Aside Default [ ] and for Leave to File
Answer but orders Defendants to pay reasonable attorney’s fees and costs incurred by Plaintiff
Joe Hand Promotions, Inc.

1
Although a default has been entered in this case, no motion for default judgment has been filed. Perhaps,
this incorrect designation resulted from the language in Plaintiff’s cover letter to Plaintiff’s Request to Enter Default.
The cover letter incorrectly referred to the document as “Plaintiff’s Request to Enter Judgment,” when no motion for
default judgment had been filed. In any event, the court treats the current motion as “Defendants’ Motion to Set Aside
Default.”

Memorandum Opinion and Order – Page 1

I.

Procedural and Factual Background
Joe Hand Promotions, Inc. (“Joe Hand” or “Plaintiff”) filed this action against Lagene

Valdez; Janico Enterprises, L.L.C.; and Timeout Hospitality Club (collectively, “Defendants”) on
May 2, 2013. Plaintiff brought suit against Defendants, pursuant to 47 U.S.C. §§ 553, 605,
contending that they violated these statutes on June 12, 2010, by their unauthorized and illegal
interception or receipt and exhibition of the “U.F.C. 115: Liddell v. Franklin” Broadcast at their
commercial establishment.
All Defendants were served with the summons and the Complaint on May 8, 2013. On or
about June 14, 2013, Defendant Valdez sent a letter to Ms. Jamie King, Plaintiff’s counsel, in
which she stated, among other things, “I am denying participation in the allegations presented in
the above reference[d] Civil Action.” Defendants contend that this letter was sufficient to
constitute an answer to the Complaint. The letter was attached to Plaintiff’s Request to Enter
Default. The clerk entered a default against Defendants on June 28, 2013.
Plaintiff disagrees that the letter constitutes an answer to the Complaint. Plaintiff contends
that Defendants’ failure to answer or otherwise respond was willful, that Defendants fail to
establish a meritorious defense, and that it will be prejudiced if the court sets aside the default.
II.

Discussion
A court may set aside an entry of a default for good cause shown. Fed. R. Civ. P. 55(c);

Lacy v. Sitel Corp., 227 F.3d 290, 291-92 (citing Fed. R. Civ. P. 55(c)). In determining whether
good cause is present to set aside a default, a court considers “whether the default was willful,
whether setting it aside would prejudice the adversary, and whether a meritorious defense is
present.” Id. at 292 (citation and quotation marks omitted). A court also considers whether the
Memorandum Opinion and Order – Page 2

defaulting party “acted expeditiously” to cure the default. Id. (citation omitted). If the court
determines that a default is willful―that is, intentional failure to answer or otherwise respond
―such “[w]illful failure alone may constitute sufficient cause for the court to deny [the] motion
[to set aside default].” Matter of Dierschke, 975 F.2d 181, 184-85 (5th Cir. 1992).
Default judgments are “generally disfavored in the law” and “should not be granted on the
claim, without more, that the defendant ha[s] failed to meet a procedural time requirement.” Lacy
v. Sitel Corp., 227 F.3d at 292 (quoting Mason & Hanger-Silas Mason Co. v. Metal Trades
Council, 726 F.2d 166, 168 (5th Cir. 1984)). The Fifth Circuit has adopted a policy in favor of
resolving cases on the merits and against the use of default judgments. See Rogers v. Hartford
Life & Accident Ins. Co., 167 F.3d 933, 936 (5th Cir. 1999); see also Sun Bank of Ocala v. Pelican
Homestead & Sav. Ass’n, 874 F.2d 274, 276 (5th Cir. 1989) (“Default judgments are a drastic
remedy, not favored by the Federal Rules and resorted to by the courts in extreme situations [and]
are available only when the adversary process has been halted because of an essentially
unresponsive party.”) (internal quotations and citations omitted).
The court recognizes that correspondence took place between Ms. King and Ms. Valdez.
The court accepts as true Ms. King’s statement that she corresponded with Ms. Valdez on three
occasions and stressed the necessity of Ms. Valdez filing an answer to the Complaint. Ordinarily,
when no answer is filed under these circumstances, a court would consider the failure to file an
answer as willful conduct. In this case, Defendant Valdez was proceeding pro se and may have
not fully understood the dire consequences of the failure to file an answer. Courts generally give
pro se parties some leeway, and they are not held to the same standards as lawyers. That settlement
discussions were ongoing further complicates this issue. While Defendant Valdez’s conduct was
Memorandum Opinion and Order – Page 3

negligent, and perhaps grossly negligent, the court cannot say that it was willful, given the totality
of the circumstances. Accordingly, the willfulness factor weighs in favor of Defendants.
With respect to a meritorious defense, the court does not have sufficient information to
make a definitive decision, but, frankly, at this stage, the meritorious defense offered by
Defendants appears to be tenuous. The court, however, is reticent to foreclose Defendants from
developing this factor at the relative infancy of this case.
Finally, the court is not convinced that Plaintiff will be prejudiced if the default is set aside.
There is no specific evidence that witnesses are unavailable or that evidence has been lost or
destroyed that would cause Plaintiff to be unable to prosecute this action. Plaintiff’s arguments
regarding the possibility of the unavailability of witnesses and fraud among Defendants are
speculative. Of course, if discovery establishes that evidence has been destroyed or that there is
fraud or collusion among Defendants, the court certainly is capable of imposing sanctions or taking
corrective action to address such conduct.
The court by no means approves of Ms. Valdez’s conduct or that of the other Defendants,
and their conduct is not cause for approbation; however, in light of the overall circumstances and
the Fifth Circuit’s position that defaults are generally disfavored and cases should be tried on the
merits, the court does not believe that a default is warranted.
The court determines that the alternative position taken by Plaintiff that any vacatur should
be conditioned on payment to Plaintiff of its reasonable attorney’s fees is the more just resolution
of this matter. Defendants’ conduct and delays necessarily caused Plaintiff to incur attorney’s fees
in obtaining a default and in responding to Defendants’ Motion to Set Aside Default. Under these

Memorandum Opinion and Order – Page 4

facts, the court determines that Defendants should pay Plaintiff its reasonable attorney’s fees
associated with obtaining the default and responding to Defendants’ Motion to Set Aside Default.
III.

Conclusion
For the reasons herein stated, the court grants Defendants’ Motion to Set Aside Default

[ ] and for Leave to File Answer. Accordingly, the court sets aside the default entered by the clerk
on June 28, 2013, and Defendants shall file an answer or otherwise respond by January 10, 2014.2
The court orders Defendants to pay Plaintiff the reasonable attorney’s fees incurred and associated
with obtaining the default against Defendants and in responding to Defendants’ Motion to Set
Aside Default. Once the court determines the amount of reasonable attorney’s fees, Defendants
shall pay those fees within thirty days. Failure to pay as ordered will result in the court striking
Defendants’ answer.
It is so ordered this 3rd day of January, 2014.
_________________________________
Sam A. Lindsay
United States District Judge

2

In Defendants’ Motion to Set Aside Default, they request that they be allowed to file “an amended
answer.” Defs.’ Mot. 7. As no answer has been filed, the correct appellation of the to-be-filed document
is “Defendants’ Answer,” not “Amended Answer.”
Memorandum Opinion and Order – Page 5