Opinion
CIVIL ACTION NO. 03-1015, SECTION "K"(4).
July 18, 2003.
MINUTE ENTRY
Before the Court are two Motions to Set Aside Entry of Default. One was filed by personal counsel for Kelsey's and the other was filed by counsel provided by Kelsey's insurer. Having reviewed the pleadings, memoranda, exhibits and the relevant law, the Court finds that the motions should be granted.
This case arises from alleged violations of the American with Disabilities Act by Kelsey's. Plaintiffs allege that Lorraine Weathington made a reservation for February 14, 2003, for eleven people specifically requesting accommodation because John Weathington, III, is confined to a wheelchair. Plaintiffs allege that they were denied these accommodations and were rudely treated in the process. Apparently, Mr. Weathington attempted to settle this matter amicably seeking a written apology from Kelsey's and a donation to a charity; such negotiations were conducted by Kelsey's personal lawyer from approximately March 13, 2003 to April 3, 2003. On that date personal counsel indicated that he had been in touch with Kelsey's insurer and need more time to confirm coverage. John Weathington, III insisted however, regardless of the money, a signed apology be forwarded by Friday April 4, 2003.
On April 10, 2003, Kelsey's was served with the instant complaint. The complaint was then forwarded via fax to the insurer's adjuster, the ASU Group on April 23, 2003 at 5:40 p.m. At this point, the insurer undertook to determine whether there was coverage under the CGL policy of insurance issued to Kelsey's for defense and liability. However the underwriter responsible for evaluating the claim was on vacation for one week.
Regardless of these on-going negotiations and the knowledge that there was a good-faith effort on-going to determine coverage, plaintiffs sought the entry of default the 21st day after service.
Federal Rule Civil Procedure 55(c) provides, "For good cause shown the court may set aside an entry of default and, if a judgment by default has been entered, may likewise set it aside in accordance with Rule 60(b)." The Fifth Circuit has noted that "good cause" is not susceptible of precise definition, and no fixed rigid standard can anticipate all of the situations that may occasion the failure of a party to answer a complaint timely," Dierschke v. O'Cheskey, 975 F.2d 181, 183 (5th Cir. 1992) (citations omitted). However, the factual situation here — the ongoing negotiations, the excusable delay in obtaining counsel through the insurer and the determination of coverage — it is clear that defendant has demonstrated good cause for relief.
Furthermore, looking at the three factors often noted for determining good cause, (1) whether the default was willful, (2) whether setting it aside would prejudice the adversary and (3) whether a meritorious defense is presented, United States v. One Parcel of Real Property, 763 F.2d 181, 183 (5th Cir. 1985), the Court cannot find the default to rise to the level of "willfulness"; there is no prejudice considering there is no substantial time delay; and there are substantial questions of fact presented in the defense of this matter. Accordingly,
IT IS ORDERED that the Motions to Set Aside Entry of Default (Docs. 5 and 6) are GRANTED.