Opinion
Case No. 00-8986-CIV-JORDAN
December 13, 2002
ORDER DENYING MOTION TO SET ASIDE CLERK'S DEFAULT
The Grants' motion to set aside the clerk's default [D.E. 43] is DENIED.
As indicated in my November 5, 2002, order, the reasons proffered by the Grants' for not responding to the complaint do not rise to the level of good cause required by Fed.R.Civ.P. 55(c). Although the Grants, in their motion, have offered additional reasons for not responding, those reasons are insufficient as well.
The Grants initially indicated that they did not respond for three reasons: (1) they had no money to pay an attorney; (2) they could not satisfy any judgment for $15 million; and (3) they did not think they could beat the government. They now contend, for the first time, that they also (4) did not comprehend the result of not responding to the complaint, and (5) relied upon the advice of counsel in not defending the action. These new reasons do not change the result.
The Eleventh Circuit considers three factors in determining whether to set aside a default: (1) whether the defaulting party presented a meritorious defense; (2) whether setting aside the default will prejudice the government; and (3) whether the default was willful or culpable. See Compania Interamerican Export-Import, S.A. v. Compania Dominicana de Aviacion, 88 F.3d 948, 951 (11th Cir. 1996). Although the Grants have indicated that they might have a meritorious defense, i.e., that the complaint is defective and the action barred by the doctrine of unclean hands, the other two factors weigh so heavily against the Grants so as to preclude a set aside.
First, the Grants' failure to respond was clearly willful and culpable. As indicated above, the Grants did not respond to the complaint because they did not think they could satisfy a judgment beat the government. These reasons indicate that the failure to respond was willful. The Grants admit that they received the complaint. They simply chose not to respond. Although they now contend that they did not comprehend the consequences of not responding, this reason does not eliminate the willfulness of their inaction under Rule 55(c). See United States v. Nails, 177 F.R.D. 696, 698 (S.D. Fla. 1997) ("The Court finds that the defendant's claim of ignorance is contradicted by the plain language of the summons, which directs him to answer the summons. Accordingly, this Court finds that the defendant's failure to answer the complaint is culpable."). See also Robinson v. United States, 734 F.2d 735, 739 (11th Cir. 1984) (default would not be set aside where government "continuously mishandled" the case, even though the conduct was not willful). The Grants' contention that they relied upon the advice of counsel does not alleviate the willfulness of their failure to respond. This newly proffered reason does not rise to the level of good cause. See Compania, 88 F.3d at 952 (no good cause where party did not respond because of political unrest in the Dominican Republic).
The Grants, for the first time, now contend that they did not receive copies of the clerk's default. This fact, however, is irrelevant. The default was entered because the Grants did not respond to the complaint, which they admit they did receive. Additionally, service is not necessary on parties in default. See Fed.R.Civ.P. 5(a).
Setting aside these defaults would also prejudice the government. The complaint in this action was filed on November 1, 2000, and it was served, along with the summons, on November 27, 2000. The clerk did not enter a default until February 15, 2001. The government filed a motion for default judgment on February 23, 2001, and default judgment was entered on February 28, 2001. It was not until the government moved to repatriate the Grants' assets that they made an appearance in this case. Their first appearance was on November 20, 2001, nearly one year after being served with the complaint. The evidence establishes that the Grants willfully refused to appear until their overseas assets were threatened. To force the government to again delay in their efforts to collect the Grants' income tax debt would be prejudicial where the Grants' failure to appear for so long a period of time was willful. I have already set aside the final default judgment and its award of $31,527,848.71, and that is all the Grants are entitled to.
Accordingly, the Grants' motion to set aside the clerk's default [D.E. 43] is DENIED.
The Grants' motion for oral argument [D.E. 44] and the government's motion for a hearing [D.E. 47] are also DENIED.
DONE and ORDERED