Opinion
Case No. 06-13541, Adversary No. 07-1006.
January 10, 2008
ORDER DENYING MOTION TO VACATE DEFAULT JUDGMENT
This matter is before the Court on debtor/defendant's Motion to Vacate Order of Default Judgment (doc. 19). The Court, having read such motion and the plaintiff's response thereto (doc. 20), hereby finds that such motion should be denied for the reasons that follow. A complaint was filed in this proceeding January 15, 2007. Defendant was duly served, but filed no answer to the complaint. On September 7, 2007, plaintiff filed a Motion for Default Judgment (doc. 12). Defendant did not file a response to the motion and on October 3, 2007, the Court entered Order Granting Motion for Default Judgment (doc. 16) because there had been no response. Defendant now seeks to have that order vacated.
Prior to that, on June 20, 2007, the Court sent debtor a letter indicating that her attorney had made it clear that her representation of defendant during her Chapter 13 case did not extend to representation for adversary proceedings. The letter from the Court specifically stated, "You are therefore unrepresented in the adversary proceeding which was filed against you." The letter from the Court required that debtor "advise the Court in writing by July 10, 2007" how she intended to proceed. No response from the debtor was received by the Court until after the Default Judgment was granted on October 3, 2007. Until this Motion to Vacate was filed on October 10, 2007 there was no indication that debtor was represented by counsel.
By her Motion, debtor seeks to vacate the Default Judgment and thereby be permitted to respond to the allegations of the complaint. The debtor contends such relief is warranted because she believed her Chapter 13 attorney was going to represent her during this adversary action but that her counsel failed to respond to the complaint or to debtor's communications. Debtor also maintains that she should have a chance to respond because she obtained new counsel October 1, 2007, who was preparing to file the preliminary pre-trial statement on her behalf by the October 10 deadline stated by the Court in its Order Governing Pretrial and Trial Proceedings.
F.R.B.P. 7055(c) is applicable here, for it expressly deals with the requirements for setting aside a default judgment. It provides that a default may be set aside for "good cause." "Good cause" has a well-defined meaning in this area of the law. For "good cause" three equitable factors must be satisfied to warrant setting aside a default judgment. These are (1) whether plaintiff will be prejudiced if the judgment is vacated; (2) whether the defendant has a meritorious defense; and (3) whether culpable conduct of the defendant led to the default. United Coin Meter Co. v. Seaboard Coastline R.R., 705 F.2d 839, 845 (6th Cir. 1983); In re Antonick, 124 B.R. 750, 753 (Bankr. S.D. Ohio 1991).United Coin Meter holds that these same factors are to be considered whether one seeks to vacate a default under F.R.B.P. 7055(c), or a default judgment under F.R.B.P. 9024(b) (which incorporates F.R.Civ.P. 60(b), modified, into bankruptcy practice.)
On the facts before us, the third factor, culpability of debtor, is so pronounced that the Court does not need to consider the other factors. Debtor's conduct has indeed been culpable. For Culpability the Court must find that debtor's behavior displays either an intent to thwart judicial proceedings or a reckless disregard for the effect of debtor's conduct on those proceedings. Antonick, 124 B.R. at p. 755. The Court finds that debtor in the matter before us has exhibited a reckless disregard for the effect of her conduct on the proceedings.
Debtor does not deny that she was served with the complaint on April 9, 2007, or that she received the motion for default on or about September 7, 2007, or that she received the letter from the Court on or about June 20, 2007, yet she responded to none of them. The correspondence from the Court to the debtor that she was not represented by her Chapter 13 attorney in regard to this adversary proceeding required that she find other representation or else inform the Court that she would proceed pro se. The Court in the letter asked debtor to respond in writing by July 10. She did not respond. Debtor cannot fail to heed the Court's advice to find representation or its warning that her Chapter 13 attorney would not be representing her in the adversary and later rely on the excuse that she believed her Chapter 13 attorney would be representing her. The Court finds debtor's lack of action and response to be culpable conduct.
For the foregoing reasons, the Motion to vacate is DENIED. This document has been electronically entered in the records of the United States Bankruptcy Court for the Southern District of Ohio. IT IS SO ORDERED.