Opinion
20-CV-8065 (JPC) (OTW)
11-29-2023
JACK BIZELIA, et. al., Plaintiffs, v. CLINTON TOWERS MANAGEMENT, et al., Defendants.
OPINION AND ORDER
ONA T. WANG, United States Magistrate Judge:
The Court has reviewed ECF Nos. 140, 141, 143, and 144. For the following reasons, the Clerk's Certificate of Default (ECF 142) is VACATED. Defendants' time to obtain counsel is EXTENDED nunc pro tunc to November 21, 2023.
I. BACKGROUND
Plaintiffs filed this action, pro se, on September 29, 2020. (ECF 2). Defendants appeared, represented by counsel Rivkin Radler LLP, by filing their answer on March 23, 2021. (ECF 20). Plaintiffs filed an amended complaint on October 26, 2021 (ECF 44), which Defendants answered on June 22, 2022. (ECF 57). On September 21, 2023, the Court held a status conference regarding Defense counsel's motion to withdraw. (See ECF Nos. 130 and 131). Ultimately, I granted Defense counsel's motion to withdraw as counsel on October 18, 2023, and stayed all proceedings for 30 days to allow time for Defendants to seek alternative or pro bono counsel. (ECF 138). On November 21, 2023, Plaintiffs' pro bono counsel, Quinn Emanuel, moved for an entry of default pursuant to Fed.R.Civ.P. 55(a), without first seeking to strike Defendants' answer. (See ECF Nos. 57, 140, and 141). The Clerk of Court entered a Certificate of Default the same day. (ECF 142). Hours after Plaintiffs' counsel filed their request for an entry of default and the Clerk entered the Certificate of Default, new pro bono counsel filed a notice of appearance. (ECF 144).
Plaintiffs' pro bono counsel, Quinn Emanuel Urquhart & Sullivan LLP (“Quinn Emanuel”), filed a notice of limited appearance on May 18, 2023. (ECF 90).
II. LEGAL STANDARD
Where, as here, the Clerk of Court has entered a Certificate of Default, but no default judgment has yet been entered, the Court decides a motion to vacate the entry of default pursuant to the “good cause” standard under Fed.R.Civ.P. 55(c), which is more lenient than the standard to set aside a default judgment under Rule 60(b). See Atl. Pac. Lines, Inc. v. N. Am. Cargo, Inc., No. 19-CV-8037 (GBD) (SDA), 2021 WL 5853327, at *2-3 (S.D.N.Y. Dec. 9, 2021); see Meehan v. Snow, 652 F.2d 274, 276 (2d Cir. 1981) (“[T]he standard for setting aside the entry of a default pursuant to Rule 55(c) is less rigorous than the ‘excusable neglect' standard for setting aside a default judgment by motion pursuant to Rule 60(b).”).
In determining whether good cause exists to set aside an entry of default, courts consider: (1) “the willfulness of the default”; (2) “the existence of a meritorious defense”; and (3) “the level of prejudice that the non-defaulting party may suffer should relief be granted.” Pecarsky v. Galaxiworld.com, Ltd., 249 F.3d 167, 171 (2d Cir. 2001). “Other relevant equitable factors may also be considered, for instance, whether the failure to follow a rule of procedure was a mistake made in good faith and whether the entry of default would bring about a harsh or unfair result.” Enron Oil Corp. v. Diakuhara, 10 F.3d 90, 96 (2d Cir. 1993). “It is well established that default judgments are disfavored,” and that “[a] clear preference exists for cases to be adjudicated on the merits.” Pecarsky, 249 F.3d at 174.
“The determination of whether to set aside a default is left to the ‘sound discretion of the judge, the person [who is] most familiar with the circumstances of the given case and . . . in the best position to evaluate the good faith and credibility of the parties.'” Sea Hope Navigation Inc. v. Novel Commodities SA, 978 F.Supp.2d 333, 337 (S.D.N.Y. 2013) (ellipsis in original) (quoting Action S.A. v. Marc Rich & Co., Inc., 951 F.2d 504, 507 (2d Cir. 1991)).
III. ANALYSIS
Applying the relevant equitable factors, the Court finds good cause to vacate the entry of default. Defendants' default was not “willful.” Defendants sought to find alternative or pro bono counsel to represent them in this case. There is no evidence that Defendants acted in bad faith, and new Defense counsel filed a notice of appearance the same day as the entry of default. A finding of willfulness is appropriate where “there is evidence of bad faith” or the default arose from “egregious or deliberate conduct.” Holland v. James, No. 05-CV-5346 (KMW) (KNF), 2008 WL 3884354, at *2 (S.D.N.Y. Aug. 21, 2008) (quoting Am. All. Ins. Co., Ltd. v. Eagle Ins. Co., 92 F.3d 57, 60-61 (2d Cir. 1996)). Courts should “resolve any doubt about [a defendant's] willfulness in [its] favor.” Raheim v. New York City Health and Hosps. Corp., No. 96-CV-01045 (JFB) (CPP), 2007 WL 2363010, at *4 (E.D.N.Y. Aug. 14, 2007) (citing Enron, 10 F.3d at 98). Further, Plaintiffs will not be significantly prejudiced by vacating the Clerk's Certificate of Default. Plaintiffs moved swiftly towards default noting that “Defendants failed to obtain new counsel within 30 days of the Court's October 18, 2023 order and are therefore in default and have failed to defend the action.” Plaintiffs' counsel's declaration in support of its entry of default (ECF 141), failed to mention any hardship caused by the delay, nor any attempts to notify Defendants regarding this delay or seek information regarding appointment of new defense counsel. In this instance, default would result in a harsh and unfair result for Defendants.
IV. CONCLUSION
For the foregoing reasons, the Clerk's Certificate of Default (ECF 142) is VACATED. Defendants' time to obtain counsel is EXTENTED nunc pro tunc to November 21, 2023. This case is no longer stayed. The parties should proceed with discovery.
The Court will hold a status conference in this matter on Wednesday, December 20, 2023 at 11:30 a.m. in Courtroom 20D, 500 Pearl Street, New York, NY 10007. The parties are directed to file a joint proposed conference agenda by Monday, December 18, 2023.
SO ORDERED.