Opinion
CIVIL ACTION NO. 99-2411, SECTION "T"
January 8, 2002
ORDER AND REASONS
Before this Court is a Motion for Default Judgment filed on October 10, 2001, on behalf of the Plaintiff, General Electrical Capital Corporation ("GECC"), pursuant to Rule 55(b)(2) of the Federal Rules of Civil Procedure. The Court, having reviewed the memoranda submitted by the parties, the exhibits, the record, and the applicable law, is fully advised on the premises and ready to rule.
I. BACKGROUND
This suit arises out of a claim filed by GECC on August 6, 1999, premised upon a money judgment rendered in 1997 against James Arnoult, Guiford Acosta, and Arnoult Equipment Construction, Inc. ("AEC"). On March 14, 2000, GECC flied a Third Amended Complaint adding AEC and others as defendants, claiming that sales among defendants were simulations, in order to move assets from AEC to defraud GECC and other creditors. Since March 14, 2000, GECC has again amended its complaint.
GECC filed a motion for default judgment against Defendant AEC on October 10, 2001 for failure to respond to GECC's third amended complaint. On October 30, 2001, Defendants AEC, Seventy-Five Grand Corporation ("Seventy-Five Grand") and Signal Companies, Inc. of Louisiana ("Signal") filed a memorandum in opposition to GECC'S motion for default judgment. On November 8, 2001, GECC filed a reply memorandum in support of its motion for default judgment against AEC.
II. LAW AND ANALYSIS
GECC alleges that default judgment should be granted under Federal Rule of Civil Procedure 55(b)(2). Entry of default judgment lies within the discretion of the district court. Lewis v. Lynn, 236 F.3d 766, 767 (5th Cir. 2001), citing Mason v. Lister, 562 F.2d 343, 345 (5th Cir. 1977). A party is not entitled to default judgment as a matter of right, even where the defendant is technically in default. Lewis, 236 F.3d at 767, citingGanther v. Ingle, 75 F.3d 207, 212 (5th Cir. 1996). Default judgments are a drastic remedy, not favored by the Federal Rules and resorted to by courts only in extreme situations. Lewis, 236 F.3d at 767, citing Sun Bank of Oscala v. Pelican Homestead and Savings Ass'n., 874 F.2d 274, 276 (5th Cir. 1989).
The parties also allege the applicability of Federal Rule of Civil Procedure 54(b), Judgment Upon Multiple Claims or Involving Multiple Parties, which states, ". . . the court may direct the entry of a final judgment as to one or more but fewer than all of the claims or parties only upon an express determination that there is no just reason for delay . . ." However, Rule 54(b) orders should not be entered routinely or as a courtesy or accommodation to counsel. Kirtland v. J. Ray McDermott Co., 568 F.2d 1166, 1171 (5th Cir. 1978), citing Panichella v. Pennsylvania R. Co., 252 F.2d 452, 455 (3d Cir. 1958), cert. denied, 361 U.S. 932, 80 S.Ct. 379, 4 L.Ed.2d 353. The power which this rule confers upon the trial judge should be used only in the infrequent harsh case as an instrument for the improved administration of justice and the more satisfactory disposition of litigation in light of the public policy indicated by statute and rule. Kirtland, 568 F.2d at 1171.
If the possibility exits that entry of default judgment against one defendant risks unavoidable inconsistency with a later judgment concerning the other defendants in the action, judgment should 1101 be entered against that defendant until the matter has been adjudicated with regard to all defendants. 10A Charles Alan Wright et al., Federal Practice Procedure § 2690 (3d ed. 1998), citing Frow v. De La Vega, 82 U.S. (15 Wall) 552, 554, 21 L.Ed. 60 (1872).
The Motion filed by GECC requests a default judgment against AEC and AEC alone based oil the allegations in Count Three of GECC's "Amended Third Amended Complaint." Count Three establishes fraudulent transfer claims against three defendants, AEC, Seventy-Five Grand, and Signal. With respect to the claims in Count Three, these three defendants are "similarly situated" because the Complaint alleges that equipment was fraudulently transferred from AEC to Seventy-Five Grand and/or Signal. It is not proper to enter a default judgment against one defendant when there are multiple defendants that are "similarly situated" because of the risk of inconsistent judgments. In re First T.D. Inv., Inc., 253 F.3d 520, (9th Cir. 2001), Home Insurance Co. of Ill. V. Adco Oil Co., 154 F.3d 739 (7th Cir. 1998). Therefore, the entering of a default judgment in this matter is not proper.
III. CONCLUSION
The Plaintiff' GECC has amended its complaint on several occasions and now seeks to a Default Judgment against AEC for failure to answer its third amended complaint. In order to avoid inconsistent results in the final verdict, the Motion for Default Judgment is hereby DENIED.
Accordingly,
IT IS ORDERED that Plaintiffs Motion for Default Judgment against Defendant AEC pursuant to Rule 55 of the Federal Rules of Civil Procedure, be, and the same is hereby, DENIED.