Opinion
Case No. 00-4099-RDR.
May 17, 2001
MEMORANDUM AND ORDER
This matter is presently before the court upon defendants' motion to set aside default judgment. Having carefully reviewed the arguments of the parties, the court is now prepared to rule.
On June 15, 2000, plaintiffs filed this action against defendants Bait Shack, Inc., a Kansas corporation doing business as Stanley's Bait Shack, a nightclub in Shawnee Mission, Kansas; and Jeffrey A. Palmer, the president and director of Bait Shack, Inc. The complaint alleged five claims of copyright infringement. The defendants were personally served with process on September 13, 2000. The clerk made an entry of default pursuant to Fed.R.Civ.P. 55(a) on November 9, 2000. Plaintiffs filed a motion for default judgment on December 8, 2000. The court granted the motion and entered default judgment against the defendants on February 12, 2001 in the form of injunctive relief and damages in the total amount of $14,087.24.
The defendants filed the instant motion on April 10, 2001. They now seek to set aside the default judgment because (1) Jeffrey Palmer and his partner failed to understand the significance of receiving service of process and the consequences of failing to file a timely answer; (2) plaintiffs failed to serve a copy of its motion for default judgment on them as required by Fed.R.Civ.P. 5(a); and (3) the court did not conduct a hearing on the amount of damages to be awarded to plaintiffs on its motion for default judgment as required by Fed.R.Civ.P. 55(b)(2).
An application to set aside a default judgment is addressed to the sound discretion of the court. Gomes v. Williams, 420 F.2d 1364, 1366 (10th Cir. 1970). Under Fed.R.Civ.P. 55(c), the court must consider a motion to set aside a default judgment under Fed.R.Civ.P. 60(b). Relief under Rule 60(b) is extraordinary in nature and may be granted only in exceptional circumstances. Cashner v. Freedom Stores, Inc., 98 F.3d 572, 576 (10th Cir. 1996). The rule sets forth six situations warranting such relief:
(1) mistake, inadvertence, surprise, or excusable neglect; (2) newly discovered evidence which by due diligence could not have been discovered in time to move for a new trial under Rule 59(b); (3) fraud (whether heretofore denominated intrinsic or extrinsic), misrepresentation, or other misconduct of an adverse party; (4) the judgment is void; (5) the judgment has been satisfied, released, or discharged, or a prior judgment upon which it is based has been reversed or otherwise vacated, or it is no longer equitable that the judgment should have prospective application; or (6) any other reason justifying relief from the operation of the judgment.
In addition to the requirements of Rule 60(b), a party seeking to set aside a default judgment must show that he has a potentially meritorious claim or defense. United States v. Timbers Preserve, 999 F.2d 452, 454 (10th Cir. 1993). The rationale for imposing this additional requirement in the default judgment context is that the court avoids the useless exercise of vacating an undoubtedly correct judgment. Pelican Production Corp. v. Marino, 893 F.2d 1143, 1147-48 n. 5 (10th Cir. 1990).
The defendants have not offered any valid legal or factual excuse for their failure to file an answer in this case. Palmer has suggested, through his counsel and without the filing of an affidavit, that he did not understand the significance of the service of process or the consequences of failing to file an answer. The court takes little pause in concluding that such a response fails to fall within the situations warranting relief under Rule 60(b). Neither carelessness nor ignorance by a party is a proper basis for relief under Rule 60(b). See Pelican Production, 893 F.2d at 1146; Cessna Finance Corp. v. Bielenberg Masonry Contracting, Inc., 715 F.2d 1442, 1446 (10th Cir. 1983). In addition, the defendants have not presented any meritorious defense to the claims made in the complaint. Such failure is fatal to their motion.
Finally, the arguments offered by the defendants through their counsel display a fundamental lack of understanding of the Federal Rules of Civil Procedure. Initially, the defendants suggest that the default judgment should be set aside because plaintiffs failed to serve them with a copy of the motion for default judgment. The defendants argue that Rule 5(a) requires service of the motion for default judgment. In fact, Rule 5(a) provides just the opposite. Rule 5(a) specifically states: "No service need be made on parties in default for failure to appear . . . ."
The defendants have also argued that the default judgment should be set aside because the court erred in not holding a hearing on the damages to be awarded. Again, defendants' counsel has either misread or misinterpreted Fed.R.Civ.P. 55(b)(2). This rule gives the court the discretion to conduct a hearing on damages; it does not require one. Fed.R.Civ.P. 55(b)(2) ("If, in order to enable the court to enter judgment or to carry it into effect, it is necessary to take an account or to determine the amount of damages or to establish the truth of any averment by evidence or to make an investigation of any other manner, the court may conduct such hearings or order such references as it deems necessary and proper . . . ."). In sum, the court finds that the defendants have offered no basis for setting aside the default judgment in this case. Accordingly, the defendants' motion shall be denied.
As explained in the prior order, plaintiffs are entitled to attorney's fees as the prevailing party in this case. See 17 U.S.C. § 505. This amount includes additional attorney's fees incurred in opposing a defendant's motion to set aside a default judgment. See Girlsongs Warner Brothers, Inc. v. Starkey, 108 F.R.D. 275, 278 (N.D.Cal. 1984). Therefore, the court will allow plaintiffs to receive the attorney's fees incurred in responding to the instant motion.
IT IS THEREFORE ORDERED that defendants' motion to set aside default judgment (Doc. # 12) be hereby denied.
IT IS FURTHER ORDERED that plaintiffs are entitled to receive the attorney's fees incurred in responding to the defendants' motion. Plaintiffs shall submit an affidavit to the court within ten days of the date of this order detailing the amount of those fees.
IT IS SO ORDERED.