Opinion
CIVIL ACTION NO. 06-6075 SECTION "T" (1).
February 21, 2008
ORDER AND REASONS
Before the Court is a Motion fore Default Judgment filed by Plaintiff, United Disaster Response, LLC (hereinafter, "UDR"). Rec. Doc. 60. The Motion requests the Court enter a default judgment against Defendant, St. Tammany Parish. St. Tammany Parish (hereinafter, "St. Tammany") filed an Opposition to the Motion. Rec. Doc. 71. The Motion came for hearing on February 13, 2008 and was submitted on the briefs without oral argument. The Court, having considered the arguments of the parties, the Court record, the law and applicable jurisprudence is fully advised in the premises and ready to rule.
I. BACKGROUND
On September 18, 2006, UDR filed this action against St. Tammany and Omni Pinnacle, LLC to recover payments for disaster relief work performed in St. Tammany Parish after Hurricane Katrina. St. Tammany was served with a copy of UDR's Complaint on October 25, 2006. See Exhibit "A" attached to Rec. Doc. 60. St. Tammany filed for two extensions of time to respond which were granted by Judge Lemelle giving St. Tammany until January 17, 2007 to file responsive pleadings. See Rec. Docs. 6, 8. On January 17, 2007, St. Tammany filed a Motion to Dismiss which Judge Lemelle denied on March 15, 2007. Rec. Doc. 28.
St. Tammany appealed Judge Lemelle's decision to the U.S. Court of Appeals for the Fifth Circuit. On December 17, 2007, the Fifth Circuit affirmed Judge Lemelle's decision. Exhibit "B" attached to Rec. Doc. 60. On January 2, 2008, St. Tammany filed a Petition for Rehearing with the Fifth Circuit. Exhibit "C" attached to Rec. Doc. 60. On January 17, 2008, the Fifth Circuit denied St. Tammany's Petition for Rehearing. See Fifth Circuit Record; Action No. 07-30348. The Fifth Circuit's mandate issued February 12, 2008. Id.
On January 14, 2008, prior to the Fifth Circuit's decision on the Petition for Rehearing, UDR filed the instant Motion for Default Judgment under FRCP 55(b)(2). Rec. Doc. 60. UDR argues that it is entitled to a default judgment because St. Tammany was supposed to file its answer by March 29, 2007, i.e. ten business days after Judge Lemelle denied its Motion to Dismiss. Rec. Doc. 60 at p. 3. UDR disputes that the time period for filing an answer was tolled while St. Tammany appealed Judge Lemelle's decision; however, assuming that argument is valid, UDR urges that the answer should have been filed by January 2, 2008 or ten business days after the Fifth Circuit affirmed Judge Lemelle's decision on December 17, 2007. Rec. Doc. 60 at p. 3. On the date the Motion for Default Judgment was filed, St. Tammany had not answered and therefore, UDR argues it is entitled to a Default Judgment under FRCP 55(b)(2).
In addition to procedural arguments, UDR argues that the Court should look at the delay in answering as inexcusable because at the time the Motion for Default Judgment was filed, it was over sixteen months since the filing of the complaint and St. Tammany "has yet to file an answer or otherwise respond to the allegations made against it." Rec. Doc. 60 at p. 4. Further, UDR points out that it has been delayed in paying its subcontractors on the St. Tammany Parish jobs because of the failure of this litigation to move at a quicker pace. Specifically, UDR argues that one of its subs has filed suit against it for payment and that other suits by "frustrated subcontractors" are soon to follow which UDR will be "forced to defend." Rec. Doc. 60 at p. 4. UDR blames St. Tammany's "procedural maneuvering" in this case by appealing Judge Lemelle's decision and then seeking rehearing on the decision as the reason why this case has not moved along and the reason why it is "financially impossible" for UDR to fully pay its subcontractors.
St. Tammany counters that Default Judgment should be denied for four reasons: (1) UDR did not follow the Federal Rules of Civil Procedure in requesting a Default Judgment as there has been no preliminary default entered; (2) the request for default is premature as it was made before the Fifth Circuit decided St. Tammany's Petition for Rehearing; (3) St. Tammany did not have to file responsive pleadings until the mandate issued by the Fifth Circuit on the issues presented in the Motion to Dismiss; and (4) the Motion is now Moot because St. Tammany has filed responsive pleadings, namely a FRCP 12(b)(6) Motion to Dismiss. Rec. Doc. 71. St. Tammany also requests Attorneys Fees and Sanctions for being forced to defend an allegedly frivolous motion. Rec. Doc. 71 at p. 12.
II. LAW AND ANALYSIS
Federal Rule of Civil Procedure 55 provides, in pertinent part:
(a) Entering a Default. When a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend, and that failure is shown by affidavit or otherwise, the clerk must enter the party's default.
(b) Entering a Default Judgment.
(1) By the Clerk. If the plaintiff's claim is for a sum certain or a sum that can be made certain by computation, the clerk — on the plaintiff's request, with an affidavit showing the amount due — must enter judgment for that amount and costs against a defendant who has been defaulted for not appearing and who is neither a minor nor an incompetent person.
(2) By the Court. In all other cases, the party must apply to the court for a default judgment. A default judgment may be entered against a minor or incompetent person only if represented by a general guardian, conservator, or other like fiduciary who has appeared. If the party against whom a default judgment is sought has appeared personally or by a representative, that party or its representative must be served with written notice of the application at least 3 days before the hearing. The court may conduct hearings or make referrals — preserving any federal statutory right to a jury trial — when, to enter or effectuate judgment, it needs to:
(A) conduct an accounting;
(B) determine the amount of damages;
(C) establish the truth of any allegation by evidence; or
(D) investigate any other matter.
(c) Setting Aside a Default or a Default Judgment. The court may set aside an entry of default for good cause, and it may set aside a default judgment under Rule 60(b).
Prior to obtaining a default judgment under either FRCP 55(b)(1) (Clerk Default Judgment) or FRCP 55(b)(2) (Court Default Judgment), there must be an entry of default as provided in FRCP 55(a). 10A FPP § 2682. The Clerk may enter a default only with regard to a claim for affirmative relief against a party who has failed to plead or otherwise defend and that failure is shown by affidavit or otherwise. FRCP 55(a). When the prerequisites of FRCP 55(a) are satisfied, an entry of default should be made by the clerk without any action being taken by the Court. 10A FFP § 2682.
A default occurs when a defendant has failed to plead or otherwise respond to the complaint within the time required by the Federal Rules. An entry of default is what the clerk enters when the default is established by affidavit or otherwise. Fed.R.Civ.P. 55(a). After defendant's default has been entered, plaintiff may apply for a judgment based on such default. This is a default judgment. New York Life Ins. Co. v. Brown 84 F.3d 137, 141 (5th Cir. 1996). Accordingly, an entry of default is merely a formal matter and does not constitute the entry of judgment. The District Judge has discretion to set aside an entry of default and a default judgment aside. See FRCP 55(c) and 60(b).
See also 46 Am, Jur. 2d Judgments § 233 providing:
Courts distinguish a judgment by default from the mere entry of default. The entry of a default does not constitute a judgment but is rather an order precluding the defaulting party from making any further defense in the case as far as his or her liability is concerned. The default entry is simply an interlocutory order that in itself determines no rights or remedies, whereas the default judgment is a final judgment that terminates the litigation and decides the dispute.
An entry of default and an entry of default judgment are two separate events or steps. The first step is the entry of default when it is shown, by affidavit or otherwise, that a defending party on a claim has failed to plead or otherwise defend. The second step is the entry of default judgment. Under some authority, an entry of default is a prerequisite to default judgment. However, the entry of the default and the default judgment may be simultaneous and by a single instrument.
The Federal Rules of Civil Procedure provide for entry of default by the clerk and for a judgment of default to be entered by the clerk or the court. However, nothing in Fed.R.Civ.P. 55 guarantees a party's right to seek setting aside a clerk's entry of default before a default judgment is entered for a failure to defend.
Here, the first step in the default process was not adhered to by UDR as it never requested the entry of a default by Clerk of Court. UDR's reply brief is incorrect insofar as it argues that FRCP 55(a) should not be adhered to because St. Tammany made an appearance by filing the original Motion to Dismiss. FRCP 55(a) requires that the Clerk of Court first determine whether an entry of default should be entered when a party has not appeared or otherwise defended the action. After that determination is made, then and only then, can a party request that a default judgment FRCP 55(b) be entered. UDR is correct that in those cases where a party has appeared only the Court can enter a default judgment under FRCP 55(b)(2); however, appearance by Motion to Dismiss does not remove the party seeking the default judgment from first requesting entry of default by the Clerk under FRCP 55(a). The difference between the 55(a) entry of default and the 55(b) default judgment is clearly laid out in the FRCP 55 as it provides a different avenue for setting aside the entry of default and the default judgment. FRCP 55(c) provides that under that section, the court may set aside an entry of default for good cause, and it may set aside a default judgment under Rule 60(b). The two are not the same and the entry of default must be made prior to any default judgment being requested and entered.
As UDR failed to request the Clerk to enter a default under FRCP 55(a), the Motion for Default Judgment is clearly premature and without merit.
St. Tammany's request for attorneys fees and sanctions is not discussed in this Order as those issues are brought by a separate motion which is set for hearing on a later date before this Court.
Accordingly and for the foregoing reasons,
IT IS ORDERED that United Disaster Response, LLC's Motion for Default Judgment, Rec. Doc. 60 is DENIED.