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M.B. v. Landgraf

United States District Court, E.D. Texas, Sherman Division

November 15, 2017

M.B., I.B., and J.S.
v.
MATTHEW G. LANDGRAF

          MEMORANDUM OPINION AND ORDER

          AMOS L. MAZZANT UNITED STATES DISTRICT JUDGE.

         Pending before the Court is Defendant Matthew Landgraf's Motion for Relief from Final Default Judgment Pursuant to Fed.R.Civ.P. 60(b)(1) (Dkt. #22). After reviewing the relevant pleadings and motion, the Court finds the motion should be granted.

         BACKGROUND

         On April 12, 2012, a federal grand jury indicted Defendant on two counts of production of child pornography in violation of 18 U.S.C. §§ 2251 (a) and (e). Subsequently, Defendant entered a guilty plea in connection with the indictment. As a result of Defendant's conduct, on November 7, 2014, Plaintiffs M.B., I.B., and J.S. initiated this suit seeking damages (Dkt. #1). On July 31, 2015, as a result of Defendant's failure to answer, the Clerk filed an Entry of Default (Dkt. #9). On April 4, 2016, the Court entered a Final Default Judgment (Dkt. #18) against Defendant.

         On April 4, 2017, Defendant filed a Motion for Relief from Final Default Judgment (Dkt. #22). Plaintiffs filed their response (Dkt. #26) on April 18, 2017, and Defendant filed his reply (Dkt. #29) on April 25, 2017.

         LEGAL STANDARD

         Federal Rule of Civil Procedure 55(c) provides that a “court may set aside an entry of default for good cause, and it may set aside a default judgment under Rule 60(b).” Fed.R.Civ.P. 55(c). Rule 60(b) lists five reasons for which relief may be granted and contains a sixth catch-all category for reasons not specifically listed. Fed.R.Civ.P. 60(b). “[F]ederal courts should not be agnostic with respect to the entry of default judgments, which are generally disfavored in the law and thus should not be granted on the claim, without more, that the defendant had failed to meet a procedural time requirement.” Lacy v. Sitel Corp., 227 F.3d 290, 292 (5th Cir. 2000). “Thus, where there are no intervening equities any doubt should, as a general proposition, be resolved in favor of the movant to the end of securing a trial upon the merits.” Id.

         ANALYSIS

         Here, Defendant seeks to have the default judgment set aside under both Rule 60(b)(1) and 60(b)(6).[1] The Court finds it is only necessary to address Defendant's Rule 60(b)(1) argument.

         I. Rule 60(b)(1)

         “On motion and just terms, the court may relieve a party or its legal representative from a final judgment, order, or proceeding for the following reasons: (1) mistake, inadvertence, surprise, or excusable neglect . . . .” Fed.R.Civ.P. 60(b)(1). When a party seeks to set aside a default judgment pursuant to Rule 60(b)(1), the Court takes into consideration three primary factors: (1) whether the defendant willfully defaulted; (2) whether a meritorious defense is presented; and (3) whether setting aside the default judgment prejudices the plaintiff. Scott v. Carpanzano, 556 F. App'x 288, 293 (5th Cir. 2014); accord Jenkens & Gilchrist v. Groia & Co., 542 F.3d 114, 119 (5th Cir. 2008); Lacy, 227 F.3d at 292. “Of these factors, two can be determinative: a district court may refuse to set aside a default judgment if it finds either that the default was willful or that the defendant failed to present a meritorious defense.” Scott, 556 F. App'x at 293-94. Other factors the Court may consider are whether the defendant acted expeditiously to correct the default and whether there is a significant financial loss to the defendant. Id. at 294; accord Lacy, 227 F.3d at 292.

         a. Willful Default

         Defendant argues his default is not the result of willfulness but instead the result of (1) Plaintiffs' informal agreement with Defendant to forego filing an answer in order to preserve Defendant's resources, (2) Plaintiffs' decision to terminate this agreement unilaterally, (3) Plaintiffs' failure to return records essential to Defendant's defense, and (4) Defendant's conclusion that Plaintiffs' next move included initiating formal discovery, not seeking a default judgment. Conversely, Plaintiffs assert despite any agreement between the parties, Defendant should have filed an answer or obtained a written agreement. Further, Plaintiffs claim seeking a default judgment was implicit in their warnings to Defendant when Defendant failed to adequately respond to Plaintiffs' requests for documents.

         “A willful default is an intentional failure to respond to litigation.” Scott, 556 F. App'x at 294. Here, Plaintiffs filed suit on November 7, 2014. Subsequently, Defendant and his counsel agreed to postpone filing an answer, pending settlement, in order to preserve resources and increase any potential recovery Plaintiffs might obtain (Dkt. #22, Exhibit 5 at ¶¶ 4-5). Plaintiffs' counsel knew of Defendant's approach and presented to the Court their approval of it.[2] Further, counsel for both parties engaged in continuous settlement communications from November 26, 2014, through March 24, 2015 (Dkt. #22, Exhibit 2). Taking into account Plaintiffs' counsel's knowledge and approval of Defendant's approach to forego filing an answer pending settlement ...


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