Opinion
3:09-CV-00574-ECR-RAM
11-23-2011
ERIC JOHNSON, Plaintiff, v. DEBELL WINDOW SYSTEMS, INC., Defendant.
Order
Defendant has filed a Motion (#18) to Set Aside Entry of Default. Plaintiff has not filed an opposition to Defendant's Motion (#18).
Plaintiff filed a complaint with the Nevada Equal Right's Commission on or about October 19, 2007, alleging discrimination because of a claimed disability. (Ex. 1 (#18).) On October 16, 2008, the Equal Rights Commission issued a notice closing the matter because it concluded that "the evidence presented did not meet the legal criteria for establishing that discriminatory acts occurred." (Ex. 3 (#18).)
On September 29, 2009, Plaintiff filed the complaint (#1) in this action. On January 27, 2010, Plaintiff filed a summons, which was issued (#3) by the Clerk of the Court on that date. On January 28, 2010, the summons and complaint were served upon Defendant's resident agent Richard Hill ("Hill"). Hill had the summons and complaint delivered to Defendant via Reno-Carson Messenger Service.
The delivery was received by an employee named Vicki Christy, who was terminated approximately three weeks after signing for Hill's delivery. Defendant has attached affidavits by Alisanne R. Steele ("Steele"), Debell Window Systems, Inc.'s controller, and William P. D'Andrea ("D'Andrea"), president and sole shareholder of Debell Window Systems, Inc., declaring that neither were provided with the summons and/or the complaint.
Steele and D'Andrea did, however, receive other complaints filed by Plaintiff, including a workmen's compensation claim, a claim for unemployment benefits, and the Nevada Equal Rights Commission claim, all of which were allegedly fully and vigorously defended against.
On April 10, 2010, Plaintiff filed a Motion (#10) for Entry of Clerk's Default. On April 14, 2010, the Clerk entered default (#11). No further action was taken until the Clerk entered a Notice (#13) Regarding Intent to Dismiss for Want of Prosecution Pursuant to Local Rule 41-1 on January 21, 2011. On February 22, 2011, Plaintiff filed a Motion for Default Judgment (#14). On June 20, 2011, this Court entered an Order (#15) setting Plaintiff's Motion for Default Judgment (#14) for a hearing. The Court further ordered that Plaintiff shall mail notice of the hearing to Hill, the resident agent for Defendant.
This Order (#15) was forwarded to Defendant by Hill, and this was apparently the first occasion on which Defendant became aware of the present action. The parties stipulated to vacate the hearing, but Plaintiff would not agree to voluntarily set aside the entry of Clerk's default, and this motion followed.
Federal Rule of Civil Procedure 55(c) provides that a court may set aside an entry of default "for good cause." In analyzing good cause, we must consider "(1) whether the defaulting party engaged in culpable conduct leading to the default; (2) whether vacating the entry of default would prejudice the plaintiff; and (3) whether the defaulting party has a meritorious defense." Rapaport v. Soffer, No. 2:1O-cv-00935-KJD-RJJ, 2011 WL 9324, at *1 (D. Nev. Jan. 3, 2011) (citing Franchise Holding II, LLC. v. Huntington Restaurants Group. Inc., 375 F.3d 922, 926 (9th Cir. 2004)). "As these factors are disjunctive, the district court was free to deny the motion 'if any of the three factors was true.'" Franchise Holding, 375 F.3d at 926 (citing American Ass'n of Naturopathic Physicians v. Hayhurst, 277 F.3d 1104, 1108 (9th Cir. 2000)).
Defendant argues that it is free from culpable conduct because the document was received by a problem employee who was terminated shortly thereafter. Defendant cites cases in which employees left the company, or lost or misdirected the complaint without giving notice to the employer, and courts set aside the entry of default for good cause shown. See, e.g., Hilla v. Keystone Shipping Co., No. 10-14881, 2011 WL 219578 (E.D. Mich. Jan. 24, 2011); Rowkosky v. Moran, 3:CV-05-0583, 2009 WL 166687 (M.D. Pa. Jan 21, 2009). However, Defendant cannot deny that service of process was properly effected on the resident agent of Debell Window Systems, Inc., and we cannot find that there is no culpability, or at least some responsibility, on the part of Defendant after proper service of process on its resident agent.
The remaining factors, however, are in favor of setting aside the entry of default in this case. Plaintiff has failed to file an opposition, despite service on Plaintiff's attorney and a Notice (#20) filed by Defendant of non-opposition. Local Rule 7-2(d) provides that the failure of an opposing party to file points and authorities in response to a motion shall constitute consent to the granting of the motion. The failure to oppose lends credence to the argument that Plaintiff will not suffer prejudice due to the granting of this motion. In addition, Defendant argues that Plaintiff was dilatory in pursuing this matter. Defendant claims that Plaintiff missed the filing deadline by more than 250 days, and then waited until the final (120th) day before serving the complaint. After the entry of clerk's default, he further sat on the matter for another nine months. The passage of time since the filing of the complaint is, in part, Plaintiff's responsibility, and we therefore find that setting aside the default will not prejudice Plaintiff, who has not opposed the Motion (#18).
In addition, "[t]he law favors deciding a case on its merits. Thus, a default judgment is appropriate only in extreme circumstances. Further, it is established that setting aside fault is remedial in nature and should be applied liberally." Raoaport, 2011 Wl 9324 at *1 (internal citations omitted). Defendant asserts that it has a meritorious defense, first and foremost because Plaintiff's complaint was untimely, and because Defendant can allegedly prove that Plaintiff was terminated due to performance problems.
Despite some responsibility on the part of Defendant, we find that the entry of default should be set aside because Defendant has shown that the failure to respond was inadvertent rather than willful, and because the other two factors, whether Plaintiff will be prejudiced, and whether Defendant has a meritorious defense, are in favor of Defendant. This is not a case in which Defendant engaged in dilatory tactics or evinced an intent to avoid defending the lawsuit.
IT IS, THEREFORE, HEREBY ORDERED that Defendant's Motion (#18) to Set Aside Entry of Default is GRANTED.
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UNITED STATES DISTRICT JUDGE