Opinion
CIVIL ACTION NO. 02-8524.
May 27, 2003
ORDER-MEMORANDUM
AND NOW, this 27th day of May, 2003, upon consideration of Plaintiff's motion for default judgment or alternative sanctions (Docket #7), Defendant's Motion to Set Aside Default (Docket # 10), and all related submissions, IT IS HEREBY ORDERED that Plaintiff's motion for default judgment or alternative sanctions is GRANTED IN PART AND DENIED IN PART, and Defendant's Motion to Set Aside Default is GRANTED. The entry of default against Defendant entered on the docket on February 23, 2003, shall be set aside. Defendant shall pay Plaintiff the sum of $300.00 to reimburse it for the expenses that it has incurred in prosecuting the motion for default judgment.
On February 23, 2003, Defendant having failed to answer Plaintiff's Complaint, default was entered against Defendant in the above-entitled action. Plaintiff now seeks a default judgment of liability against Defendant and a hearing on the issue of damages. Defendant seeks to have the entry of default set aside.
The decision of whether to grant a default judgment is left to the sound discretion of the district court. Harad v. Aetna Ins. Co., 839 F.2d 979 (3d Cir. 1988). The United States Court of Appeals for the Third Circuit has held that, "Three factors control whether a default judgment should be granted: (1) prejudice to the plaintiff if default is denied, (2) whether the defendant appears to have a litigable defense, and (3) whether defendant's delay is due to culpable conduct." Chamberlain v. Giampapa, 210 F.3d 154, 164 (3d Cir. 2000). Although the determination of whether to grant a default judgment is within this Court's discretion, the Third Circuit generally disfavors the entry of such default judgments. Harad, 839 F.2d at 982.
I. Litigable Defense
"The showing of a meritorious defense is accomplished when `allegations of defendant's answer, if established on trial, would constitute a complete defense to the action.'" United States v. $55,518.05 in U.S. Currency, 728 F.2d 192, 195 (3d Cir. 1984) (quoting Tozer v. Charles A. Krause Milling Co., 189 F.2d 242, 244 (3d Cir. 1951)). It is not enough for Defendant to simply deny the factual allegations in Plaintiff's complaint. Rather, Defendant must allege facts which, if established, would enable Defendant to prevail in the action.$55,518.05 in U.S. Currency, 728 F.2d at 196.
In the instant case, Plaintiff asserts a breach of contract claim against Defendant for allegedly failing to properly design and install a pollution control device in Plaintiff's factory. (Compl. ¶¶ 30-35). Plaintiff also asserts a claim of professional malpractice based upon negligent engineering advice Defendant provided to Plaintiff. (Compl. ¶¶ 36-44). Defendant's Answer specifically alleges that Plaintiff bought the pollution control device from Defendant with full knowledge that the device had been designed for another facility and might not be adequate for Plaintiff's needs. (Ans. ¶ 14). Moreover, Defendant alleges that it never gave Plaintiff any engineering advice that could form the basis for a professional malpractice claim. (Ans. ¶ 22). Defendant has therefore alleged facts that, if proven at trial, would establish that it neither breached its contract with Plaintiff nor acted negligently with respect to the advice it gave Plaintiff. Thus, this factor weighs against the granting of default judgment in this case.
II. Culpable Conduct
_____ Culpable conduct can include intentional conduct or reckless disregard for repeated communications from the Plaintiff or the Court combined with a failure to investigate a serious injury. Hritz v. Wama Corp., 732 F.2d 1178, 1183 (3d Cir. 1984). Mere negligence on the part of the defendant is not sufficient for a finding of culpable conduct. Id. Plaintiff argues that Defendant's failure to answer the Complaint constituted a deliberate attempt to avoid the Complaint and delay the proceedings. However, Plaintiff has not presented any evidence that Defendant's failure to timely answer the Complaint was the result of a "strategic decision," as opposed to the result of mere negligence. See Brand v. NCC Corp., 540 F. Supp. 562 (E.D. Pa. 1982). Thus, this factor also weighs against the granting of default judgment in this case.
III. Prejudice
Plaintiff argues that it has already been prejudiced by expending time on issues of default, rather than on the merits of the case. However, to establish prejudice, Plaintiff must establish more than the mere fact that proceedings have been delayed due to the need to litigate the default judgment issue. Rather, in order to establish prejudice, a plaintiff must at least allege that the defendant's default has in some way hindered its ability to establish its case. Feliciano v. Reliant Tooling Co., Ltd., 691 F.2d 653, 657 (3d Cir. 1982). The mere fact that Plaintiff may be subjected to additional expense and delay in prosecuting this action if its motion for default judgment is denied is therefore not sufficient to establish prejudice. See id. at 656-57 ("delay in realizing satisfaction on a claim rarely serves to establish the degree of prejudice sufficient to prevent the opening of a default judgment entered at an early stage of the proceeding."). Plaintiff argues that the delay caused by Defendant's actions has "potentially resulted in the loss of documentary evidence and/or the fading of memories." (Pl's Mem. In Opposition to Motion to Set Aside Default at p. 1). However, Plaintiff has alleged no facts which could establish either that a loss of evidence has already occurred or even that such a loss is likely to occur.
In sum, all three factors weigh against the granting of default judgment in this case. Therefore, Plaintiff's motion for default judgment is denied, and Defendant's Motion to Set Aside Default is granted.
IV. Alternative sanctions
Plaintiff requests that the Court grant it a monetary award of $400.00 as an alternative sanction for Defendant's failure to timely answer the Complaint. Plaintiff asserts that this award will only partly reimburse it for the costs that it has incurred in preparing the motion for default judgment.
In an appropriate case, a Court may, as an alternative sanction, order a defendant to reimburse the plaintiff for the expenses that it has incurred in prosecuting a motion for default judgment. Harrison v. Host Marriott Corp., No. Civ. A. 97-5925, 1997 WL 792902, at *3 (E.D. Pa. Dec. 19, 1997); Grow Tunneling Corp. v. Conduit Found. Co., Inc., No. Civ. A. 96-3127, 1996 WL 411658, at *7 (E.D. Pa. July 16, 1996). Courts have issued such sanctions both to compensate Plaintiffs and to discourage such behavior in the future. Foy v. Dicks, 146 F.R.D. 113, 117 (E.D. Pa. 1993). Defendant's submissions to the Court do not contain any explanation for its failure to answer the Complaint in a timely manner. Thus, the Court in its discretion orders Defendant to pay Plaintiff the sum of $300.00 as an alternative sanction for Defendant's failure to timely answer Plaintiff's Complaint. The Court considers this amount fair and reasonable compensation for the expenses incurred by Plaintiff in prosecuting the motion for default judgment.
Plaintiff's motion for default judgment also requests that, in the event that a default judgment is not granted, the Court grant Plaintiff additional time to effect service upon Defendant. However, Defendant has already filed an Answer to the Complaint in this action, and this Answer does not challenge the sufficiency of process upon Defendant. Thus, this request is denied as moot.