WV Therapy Services, LLC v. Moshe Orlinsky
Filing
25
MEMORANDUM OPINION AND ORDER GRANTING THE PLAINTIFFS MOTION TO SET ASIDE DEFAULT DKT. NO. 21 . Signed by District Judge Irene M. Keeley on 1/18/2013. (Copy counsel of record via CM/ECF)(jmm)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF WEST VIRGINIA
WV THERAPY SERVICES, LLC,
Plaintiff,
v.
//
CIVIL ACTION NO. 1:12CV124
(Judge Keeley)
MOSHE ORLINSKY, doing business
as Missouri Valley Health Care,
Defendant.
MEMORANDUM OPINION AND ORDER GRANTING THE PLAINTIFF’S
MOTION TO SET ASIDE DEFAULT [DKT. NO. 21]
On December 21, 2012, the Clerk of Court entered a default
against the plaintiff, West Virginia Therapy Services, LLC (“WVTS”)
for failing to file a timely response to the counterclaims of the
defendant, Moshe Orlinsky (“Orlinsky”), doing business as Missouri
Valley Health Care. (Dkt. No. 19). On December 22, 2012, WVTS moved
the Court to set aside the default. (Dkt. No. 21). The motion is
now fully briefed and ripe for disposition.
I.
This case arises from a contract between Orlinsky, who owns a
nursing home in Richwood, West Virginia, and WVTS, with whom he
contracted to provide therapy services to nursing home residents.
In its complaint, WVTS alleges that Orlinsky breached the contract
by
withholding
contract’s
payment
non-compete
for
services
clause,
and
rendered,
to
failing
violating
to
pay
the
WVTS
WV Therapy Services, Inc. v. Orlinsky
1:12cv124
ORDER GRANTING MOTION TO SET ASIDE DEFAULT [DKT. NO. 21]
reasonable fees and expenses associated with the enforcement of the
contract. (Dkt. No. 1-2). On October 31, 2012, Orlinsky answered
the complaint and counterclaimed, asserting that WVTS had failed to
perform under the contract in various ways. (Dkt. No. 17).
Counsel for WVTS was notified of the counterclaim via the
CM/ECF system, and thus was served with notice as of October 31,
2012. See L.R.C.P. 5.06. Pursuant to Fed.R.Civ.P. 12(a)(1)(A)(I),
WVTS had to answer Orlinsky’s counterclaim on or before November
21, 2012. As of December 20, 2012, when WVTS moved for entry of
default, (dkt. no. 18), WVTS had not done so. Accordingly, on
December 21, 2012, the Clerk of Court entered default against WVTS
pursuant to Fed.R.Civ.P. 55(a). WVTS now moves the Court to set
aside that default.
II.
A court may “set aside an entry of default for good cause.”
Fed. R. Civ. P. 55(c). Courts interpret Rule 55(c) liberally to
avoid the “onerous consequences” of defaults and default judgments.
Tolson v. Hodge, 411 F.2d 123, 130 (4th Cir. 1969). Any doubts
should be resolved in favor of setting aside an entry of default
and hearing a case on the merits. Id. Stated differently, a default
judgment should be entered only if other sanctions would not
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WV Therapy Services, Inc. v. Orlinsky
1:12cv124
ORDER GRANTING MOTION TO SET ASIDE DEFAULT [DKT. NO. 21]
suffice. See Lolatchy v. Arthur Murray, Inc., 816 F.2d 951, 953
(4th Cir. 1987). “The disposition of motions made under Rule [ ]
55(c) ... is a matter which lies largely within the discretion of
the trial judge and his action is not lightly to be disturbed by an
appellate court.” Payne ex rel. Estate of Calzada v. Brake, 439
F.3d 198, 204 (4th Cir. 2006) (citing Consolidated Masonry &
Fireproofing, Inc. v. Wagman Constr. Corp., 383 F.2d 249, 251 (4th
Cir. 1967)).
The factors used to determine if “good cause” warrants setting
aside an entry of default are
whether the moving party has a meritorious defense,
whether it acts with reasonable promptness, the personal
responsibility of the defaulting party, the prejudice to
the party, whether there is a history of dilatory action,
and the availability of sanctions less drastic.
Id. at 204-05.
In
the
Fourth
Circuit,
the
“meritorious
defense”
and
“reasonable promptness” factors are given the most weight. See
Consol. Masonry & Fireproofing, Inc., 383 F.2d at 251. “Whether a
party has taken ‘reasonably prompt’ action ... must be gauged in
light of the facts and circumstances of each occasion . . . .”
United States v. Moradi, 673 F.2d 725, 727 (4th Cir. 1982). “In
order to establish a meritorious defense, the defaulting party need
only present evidence which, if believed, would permit either the
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WV Therapy Services, Inc. v. Orlinsky
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ORDER GRANTING MOTION TO SET ASIDE DEFAULT [DKT. NO. 21]
Court or the jury to find for the defaulting party.” Kartmann v.
Markle, No. 5:10CV106, 2011 WL 2671240, *1 (N.D.W. Va., July 7,
2011) (citing Moradi, 673 F.3d at 727)). Additionally, a court may
consider whether the default would wrongly disadvantage a blameless
party when attorney error is the sole cause of the default. Id. at
*2 (citing Moradi, 673 F.3d at 727).
III.
After considering the factors set forth in Payne, the Court
concludes that good cause exists to set aside the default against
WVTS. First, based on its answer and the affidavit of Greg Hayes,
managing member of WVTS, WVTS presents a meritorious defense to the
counterclaims of Orlinsky. In its answer, WVTS expressly denies
that it failed to perform under the contract, as alleged by
Orlinksy. Moreover, Hays affirmatively states in his affidavit that
WVTS performed under the contract. Thus, should a jury believe
Hays, it could decide Orlinsky’s counterclaims in favor of WVTS.
Second, WVTS has acted with reasonable promptness. On December
21, 2012, only one day after entry of default, WVTS answered
Orlinsky’s counterclaim and moved to set aside the default. These
prompt responses, and the fact that the case is still in its early
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ORDER GRANTING MOTION TO SET ASIDE DEFAULT [DKT. NO. 21]
stages, counsels in favor of the conclusion that WVTS acted with
reasonable diligence in response to the default.
Third, and importantly, WVTS was not personally responsible
for the delayed answer to Orlinsky’s counterclaim. Counsel for WVTS
provided the Court with an affidavit attesting to counsel’s own
mistake
in
overlooking
the
CM/ECF
notification
of
Orlinsky’s
counterclaims. (Dkt. No. 22-2). It would unfairly disadvantage WVTS
to hold it responsible for the error of its attorney.
Fourth, WVTS has otherwise complied with all deadlines in this
proceeding, and does not evince a history of dilatory actions.
Furthermore, as WVTS’s failure to answer Orlinsky’s counterclaim
delayed the proceeding by no more than two months, and there is no
indication that WVTS intentionally caused that delay, it has caused
Orlinsky little or no prejudice. On the other hand, allowing the
default
to
remain
in
place
would
seriously
prejudice
WVTS,
particularly when the delayed response was due to attorney error.1
1
The final factor, whether a less drastic sanction is
available, is moot in this case because Orlinsky did not specifically
request costs and fees associated with the default. Absent such a
request, the Court will not sua sponte order WVTS to pay those fees.
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WV Therapy Services, Inc. v. Orlinsky
1:12cv124
ORDER GRANTING MOTION TO SET ASIDE DEFAULT [DKT. NO. 21]
IV.
In conclusion, for the reasons discussed above, the Court
GRANTS the plaintiff’s motion to set aside the default. (Dkt. No.
21).
It is so ORDERED.
The Court directs the Clerk to transmit copies of this Order
to counsel of record.
DATED: January 18, 2013
/s/ Irene M. Keeley
IRENE M. KEELEY
UNITED STATES DISTRICT JUDGE
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