Opinion
2:22-cv-08745-SPG-PD
07-24-2023
GS Holistic, LLC v. Top Shelf Company LLC et al
Present: The Honorable SHERILYN PEACE GARNETT UNITED STATES DISTRICT JUDGE
CIVIL MINUTES - GENERAL
Proceeding: (IN CHAMBERS) ORDER TO SHOW CAUSE RE: FAILURE TO REQUEST TO SET ASIDE DEFAULT
Defendants are ORDERED to show cause by no later than August 4, 2023, why this Court should not strike their answer, filed on July 17,2023, as void for not having first requested the Court to set aside its entry of default against Defendants under Federal Rule of Civil Procedure 55.
Obtaining default judgment is a two-step procedure. Rule 55(a) provides that “[w]hen a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend ... the clerk must enter the party's default.” Fed.R.Civ.P. 55(a). After default is properly entered by the clerk, a party seeking relief other than a sum certain must apply to the Court for a default judgment. Fed.R.Civ.P. 55(b). “The court may set aside an entry of default for good cause, and it may set aside a final default judgment under Rule 60(b).” Fed.R.Civ.P. 55(c).
An “entry of default” is a technical formality; a plaintiff must merely show, “by affidavit or otherwise,” that “a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend,” upon which showing “the clerk must enter the party's default.” Fed.R.Civ.P. 55(a). Therefore, setting aside an entry of default under Rule 55(c) is more straightforward than setting aside a default judgment under Rule 60(b). See U.S. v. Signed Pers. Check No. 730 of Yubran S. Mesle, 615 F.3d 1085,1091 n.1 (9th Cir. 2010) (“[l]n the Rule 55 context there is no interest in the finality of the judgment with which to contend.”); Fed.R.Civ.P. 55 Adv. Comm. Note (2015 Amendment) (“The demanding standards set by Rule 60(b) apply only in seeking relief from a final judgment.”).
When a motion to set aside entry of default is filed prior to the entry of a default judgment, district courts have “especially broad” discretion to set aside default. Brady v. United States, 211 F.3d 499, 504 (9th Cir. 2000). In determining whether good cause exists to set aside an entry of default, a court must consider three factors: (i) whether the defendant engaged in culpable conduct that led to the default; (ii) whether the defendant had no meritorious defense; or (iii) whether setting aside the entry of default would prejudice the opposing party. Mesle, 615 F.3d at 1091. The standard is disjunctive, such that a finding that any one of these factors is true is sufficient reason for a court to refuse to set aside an entry of default. Id.
Here, the clerk already has entered default against Defendants Kyrillos Fahmie and Top Shelf Company LLC. See (ECF No. 24). On June 6, 2023, Plaintiff moved for entry of default under Rule 55(b). (ECF No. 26). On July 17, 2023, Defendants answered the complaint, but did not first move to set aside the entry of default. (ECF No. 31). “Where a defendant has filed an answer, as here, the Court cannot enter a default unless the Answer is first stricken.” Staniforth v. Total Wealth Mgmt., Inc., No. 14-CV-01899-GPC-JLB, 2022 WL 774733, at *2 (S.D. Cal. Feb. 17, 2022). “A defendant's answer may be stricken when the defendant persistently fails to participate in the action.” Id. Thus, Defendants must demonstrate by no later than August 4, 2023, good cause to set aside the entry of default. Otherwise, the Answer will be stricken.
IT IS SO ORDERED