Opinion
Case No. 01 C 4710
September 9, 2002
ORDER
The government alleges that defendants Debra King, Evadney King, and Robert King submitted false financial aid applications to the government and, as a result, received $11,640 in student grants. The government filed a motion for entry of default judgment on November 8, 2001. When defendants failed to appear on the presentment date for the motion, November 14, 2001, the court granted it and entered default judgment. Presently before the court are two post judgment motions requesting that the default judgment be set aside.
Rule 60 of the Federal Rules of Civil Procedure provides:
On motion and upon such terms as are just, the court may relieve a party or a party's representative from a final judgment, order, or proceeding for . . . mistake, inadvertence, surprise, or excusable neglect. . . . The motion shall be made within a reasonable time, and . . . not more than one year after the judgment, order, or proceeding was entered or taken.
Fed.R.Civ.P. 60(b). Under this rule, courts require the movant to show good reason for the default reasonably quick action to correct the default, and the existence of a potentially meritorious defense. Jones v. Phipps, 39 F.3d 158, 162 (7th Cir. 1994).In the exercise of its discretion, this court grants defendants' request to set aside the default judgment.
First, Defendants have made a sufficient showing of mistake, inadvertence, surprise, or excusable neglect. Evadney King avers that she received no letter from the government concerning any problem with her student grants and that she first learned of this lawsuit in September 2001 when a copy of the summons and complaint in this action was delivered to her home. Problems usually are resolved out of court, so being thrust suddenly into litigation was no doubt surprising. Immediately thereafter, Evadney's father and co-defendant, Robert, called Lisa M. Noeller, the Assistant United States Attorney handling the case. In a follow-up letter dated September 7, 2001, Noeller stated that she would evaluate the possibility of resolving the case if defendants returned the enclosed forms. The letter went on to confirm that there was a status hearing on October 4, 2001 and to state that all parties were to appear if the case had not been resolved. On September 12, 2001, Evadney faxed the government a letter including signed Tax Information Authorization forms (presumably the same forms mentioned in Noeller's letter). Based on Evadney's communications with Noeller and her father, Evadney swears that she believed defendants' cooperation constituted resolution of the matter and that Noeller would appear at the status hearing on their behalf. Evadney began to check whether she had been a victim of identity fraud. On November 14, 2001, Evadney opened her mail at work around 9:30 a.m. to find a copy of the government's motion for default, which was set for 9:30 a.m. that same day. Obviously, it is excusable for a party to fail to attend a hearing for which she receives such late notice.
Second, defendants acted with reasonable quickness. The day after entry of the default judgment, Evadney emailed Noeller to explain her absence and to ask why she had not received earlier notice. Evadney claims that Noeller told her that she had to file a motion within thirty days of the order. On December 13, 2001, Evadney, on behalf of herself and her co-defendants and unrepresented by counsel, filed a "motion to appeal default judgment," along with a certificate of service but no notice of presentment. Defendants requested that the court "grant us review of the matter contained in" this case. (Mot. at 1.) After obtaining counsel, defendants filed a motion to vacate default on March 8, 2002. The government cites defendants' misuse of the word "appeal" in the title of their December motion and their failure to attach a notice of presentment in support of its argument that defendants unreasonably sat on their rights for almost four months. The court declines to rest on such formalities where defendants were without counsel, where the body of the December motion made its purpose perfectly clear, and where Evadney's email gave Noeller almost immediate notice that defendants objected to the entry of default judgment.
Finally, defendants have identified a potentially meritorious defense. As a preliminary matter, the court notes that a defendant is not required to conclusively establish the merits of any defense before a default judgment will be set aside. The purpose of a Rule 60(b) motion is to decide whether the case should be reopened, not who should ultimately prevail. Here, defendants claim that they relied upon a paid accountant to submit accurate documents. If true, this could negate the intent element of the alleged statutory violation and common law claims.
Accordingly, defendants' motion to vacate the default judgment is granted.