United States District Court, E.D. Texas, Sherman Division
MEMORANDUM OPINION AND ORDER
L. MAZZANT, UNITED STATES DISTRICT JUDGE
before the Court are Plaintiff's Motion for Default
Judgment (Dkt. #9) and Defendants' Motion to Vacate
Clerk's Entry of Default (Dkt. #11). After reviewing
the record, the Court finds that Plaintiff's Motion for
Default should be denied, and the clerk's entry of
default should be vacated.
23, 2017, Plaintiff sued Defendants asserting claims for
breach of contract, breach of fiduciary duty, fraud, fraud by
nondisclosure, conversion, and unjust enrichment (Dkt. #4).
On August 22, 2017, Plaintiff filed his request for a
Clerk's Entry of Default asserting that Defendants failed
to timely answer (Dkt. #7). On August 23, 2017, the
Clerk's Entry of Default was entered against Defendants
(Dkt. #8). On September 13, 2017, Plaintiff filed his motion
for default judgment (Dkt. #9). Defendants filed a response
to this motion on October 2, 2017 (Dkt. #12). Defendants
filed a motion to set aside the default judgment on March 3,
2011 (Dkt. #11). On October 9, 2017, Plaintiff filed an
amended reply (Dkt. #16). October 16, 2017, Defendants filed
a sur-reply (Dkt. #17).
of the Federal Rules of Civil Procedure sets forth certain
conditions under which default may be entered against a
party, as well as the procedure to seek the entry of default
judgment. Fed.R.Civ.P. 55. The Fifth Circuit requires a
three-step process for securing a default judgment. New
York Life Ins. Co. v. Brown, 84 F.3d 137, 141 (5th Cir.
1996). First, a default occurs when a defendant has failed to
plead or otherwise respond to the complaint within the time
required by Rule 12 of the Federal Rules of Civil Procedure.
Fed.R.Civ.P. 55(a); New York Life Ins., 84 F.3d at
141. Next, an entry of default may be entered by the clerk
when the default is established by affidavit or otherwise.
Fed.R.Civ.P. 55(a); New York Life Ins., 84 F.3d at
141. Third, a plaintiff may then apply to the clerk or the
court for a default judgment after an entry of default.
Fed.R.Civ.P. 55(b); New York Life Ins., 84 F.3d at
may set aside an entry of default “for good cause
shown.” Fed.R.Civ.P. 55(c); 60(b). “[T]he
requirement of ‘good cause' . . . ha[s] generally
been interpreted liberally.” Amberg v. Fed. Deposit
Ins. Corp., 934 F.2d 681, 685 (5th Cir. 1991). Courts
will look at the following factors to determine whether there
is good cause to set aside a default: (1) whether the failure
to act was willful; (2) whether setting the default aside
would prejudice the adversary; and (3) whether a meritorious
claim has been presented. Lacy v. Sitel Corp., 227
F.3d 290, 292 (5th Cir. 2000). Other factors, such as whether
the party acted expeditiously to correct the default, may
also be considered. Effjohn Intern. Cruise Holdings, Inc.
v. A&L Sales, 346 F.3d 552, 563 (5th Cir. 2003)
(citing Dierschke v. O'Cheskey, 975 F.2d 181,
184 (5th Cir. 1992)). These factors are not exclusive, but
are to be regarded simply as a means to identify good cause.
Id. However, willful failure alone may, in some
circumstances, constitute sufficient cause for the court to
deny a motion to set aside. Dierschke, 975 F.2d at
the Fifth Circuit has adopted a policy in favor of resolving
cases on the merits and against the use of default judgment.
Rogers v. Hartford Life & Accident Ins. Co., 167
F.3d 933, 936 (5th Cir. 1999). “This policy, however,
is counterbalanced by considerations of social goals, justice
and expediency, a weighing process [that] lies largely within
the domain of the judge's discretion.” Id.
(internal quotations and citations omitted).
now move to set aside the clerk's entry of default, and
Plaintiff requests that his motion for default judgment be
granted. Regardless, the Court finds that, even if
technically proper, the clerk's entry of default should
be set aside.
record indicates that the parties filed a Stipulation and
Order to Extend Defendants' Deadline to Respond to Motion
for Default Judgment (Dkt. #10), which extended Defendants
time to respond to October 2, 2017. Defendants filed a
responsive pleading, a motion to dismiss, which included
motion to set aside the default, and an answer to the
Complaint on October 2, 2017 (Dkt. #11 at p. 10-12; Dkt. #12;
Dkt. #13). After entry of the clerk's default, Defendants
acted promptly by filing a motion to set aside the default.
light of these guiding principles, the Court finds that
Defendants have shown good cause, and default judgment is
simply not appropriate here. Under Federal Rule of Civil
Procedure 55, default is appropriate if a defendant has
“failed to plead or otherwise defend” the suit.
Fed.R.Civ.P. 55(a). Defendants have now properly appeared in
this suit, making default inappropriate. Default judgments
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.” Mason & Hanger-Silas
Mason Co. v. Metal Trades Council, 726 F.2d 166, 168
(5th Cir. 1984). Because the record here indicates that
Defendants were actively defending the claims against them
prior to the granting of Plaintiff s motion for default
judgment (and was attempting to defend the claims when the
clerk's default was entered) and the Court finds no
prejudice to Plaintiff, the clerk's entry of default
should be vacated and the motion for default judgment should
hereby ORDERED that Plaintiff s Motion for
Default Judgment (Dkt. #9) is DENIED and
Defendant's Motion to Set Aside Entry of Default (Dkt.