Rogers v. Hartford Life and Acc. Ins. Co.

• Citation: 167 F.3d 933
• Decision Date: 02 March 1999
• Docket Number: No. 97-60814,97-60814
• Parties: Glynn W. ROGERS, Plaintiff-Appellee-Cross-Appellant, v. HARTFORD LIFE AND ACCIDENT INSURANCE COMPANY; Entergy Corporation Companies Benefits Plus Long Term Disability Plan, Defendants-Appellants-Cross-Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

Page 933

167 F.3d 933

Glynn W. ROGERS, Plaintiff-Appellee-Cross-Appellant, v. HARTFORD LIFE AND ACCIDENT INSURANCE COMPANY; Entergy Corporation Companies Benefits Plus Long Term Disability Plan Defendants-Appellants-Cross-Appellees.

No. 97-60814.

United States Court of Appeals Fifth Circuit.

March 2, 1999.

Joel W. Howell, III, Jackson, MS, for Rogers.

John E. Hughes, III, Jonathan Terry McCants, Wells, Wells, Marble & Hurst, Jackson, MS, for Hartford Life & Acc. Ins. Co.

Douglas Edward Levanway, Chad Michael Knight, Wise, Carter, Child & Caraway, Jackson, MS, for Entergy Corp. Companies Benefits Plus Long Term Disability Plan.

Appeals from the United States District Court for the Southern District of Mississippi.

Before JOLLY, DUHE and EMILIO M. GARZA, Circuit Judges.

EMILIO M. GARZA, Circuit Judge:

Appellants, Hartford Life and Accident Insurance Company ("Hartford") and Entergy Corporation Companies Benefits Plus Long Term Disability Plan (the "Plan"), appeal the district court's denial of their motions to set aside the default judgment entered against them. Appellee, Glynn W. Rogers, cross-appeals the district court's order setting aside that amount of the default judgment awarded for medical expenses and the prejudgment interest attributable to such expenses. We affirm.

I

Rogers, a former employee of Entergy Corporation, sought long-term disability benefits from the Plan. Hartford insured the long-term disability portion of the Plan. Hartford denied Rogers long-term disability benefits. Rogers then filed a complaint under the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001, et seq. ("ERISA"), against the Plan and Hartford.

Rogers undertook to serve the Plan with process by sending a copy of the summons and complaint by certified mail, return receipt requested, to the Plan's administrator in New Orleans, Louisiana. With respect to Hartford, Rogers requested that Hartford's agent for process in Mississippi, Elizabeth Coleman, execute a waiver of service of process. She complied with this request, and the waiver of service of process was filed with the district court.

Neither Hartford nor the Plan timely answered Rogers' complaint. On Rogers' request, the district court clerk filed an entry of default. Following a hearing, the district court then entered a default judgment against both Hartford and the Plan, awarding Rogers expenses for disability benefits, medical benefits, prejudgment interest, and attorney's fees. Over a month later, Hartford and the Plan became aware of the default judgment, and promptly moved for relief. Hartford and the Plan motioned the district court to set aside the default judgment in its entirety, or, in the alternative, to set aside that portion of the judgment relating to medical benefits. The district court denied their motions to set aside the default judgment in its entirety. It decided, however, that Rogers could not recover expenses for medical treatment, and ordered the default judgment adjusted accordingly. Hartford and the Plan timely appealed; Rogers cross-appealed.

Hartford and the Plan contend that the district court abused its discretion in refusing to set aside the entire default judgment. Hartford argues that it appeared in the action by waiving service of process, and therefore, under Federal Rule of Civil Procedure 55(b)(2) it was entitled to three days notice prior to the entry of a default judgment. Hartford never received notice. Additionally, it argues that its failure to respond timely to Rogers' complaint constituted excusable neglect, and that other equitable considerations weigh in favor of setting aside the default judgment. The Plan argues that Rogers improperly served it with process, and therefore, the district court lacked jurisdiction to enter the default judgment. It also argues that we should set aside the default judgment because venue was improper under ERISA. Finally, the Plan argues that its failure to respond timely to Rogers' complaint constituted excusable neglect.

In his cross-appeal, Rogers argues that the district court erroneously set aside that portion of the default judgment compensating him for medical expenses. According to Rogers, the award of medical expenses is necessary to restore him to the position he occupied prior to the wrongful denial of his long-term disability benefits. Rogers contends that ERISA provides for the recovery of this type of relief, and asks us to reinstate the award of medical expenses.

We discuss the arguments raised by Hartford first. We then consider the Plan's arguments. Finally, we discuss the merits of Rogers' cross-appeal.

II

We have adopted a policy in favor of resolving cases on their merits and against the use of default judgments. See Lindsey v. Prive Corp., 161 F.3d 886, 892-93 (5th Cir.1998); Sun Bank of Ocala v. Pelican Homestead & Sav. Ass'n, 874 F.2d 274, 276 (5th Cir.1989)("Default judgments are a drastic remedy, not favored by the Federal Rules and resorted to by the courts only in extreme situations."). This policy, however, is " 'counterbalanced by considerations of social goals, justice and expediency, a weighing process [that] lies largely within the domain of the trial judge's discretion.' " Pelican Prod. Corp. v. Marino, 893 F.2d 1143, 1146 (10th Cir.1990)(quoting Gomes v. Williams, 420 F.2d 1364, 1366 (10th Cir.1970)); see also Dolphin Plumbing Co. of Florida v. Financial Corp. of North America, 508 F.2d 1326, 1327 (5th Cir.1975)("The decision whether to set aside a default judgment is left to the sound discretion of the trial judge"). Accordingly, we review the district court's decision not to set aside the default judgment for abuse of discretion. See Dierschke v. O'Cheskey, 975 F.2d 181, 184 (5th Cir.1992).

A

Hartford argues that the district court should have set aside the default judgment because the court entered the judgment without notice to Hartford. Rule 55(b)(2) provides: "If the party against whom judgment by default is sought has appeared in the action, the party (or, if appearing by representative, the party's representative) shall be served with written notice of the application at least 3 days prior to the hearing on such application." Id. (emphasis added). Whether the district court should have given Hartford notice of the default judgment depends on whether Hartford "appeared in the action."

We have taken an expansive view as to what constitutes an appearance under Rule 55(b)(2). We have not construed the phrase "has appeared in the action" to require the filing of responsive papers or actual in-court efforts by the defendant. See United States v. McCoy, 954 F.2d 1000, 1003 (5th Cir.1992) (noting the "relatively low threshold for making an appearance for purposes of Rule 55(b)(2)'s three-day notice requirement"). Rather, to qualify as an appearance and trigger Rule 55(b)(2)'s notice requirements, the defendant's actions merely must give the plaintiff a clear indication that the defendant intends to pursue a defense and must "be responsive to the plaintiff's formal Court action." Baez v. S.S. Kresge Co., 518 F.2d 349, 350 (5th Cir.1975); see also Sun Bank, 874 F.2d at 276 (noting that appearances " 'include a variety of informal acts on defendant's part which are responsive to plaintiff's formal action in court, and which may be regarded as sufficient to give plaintiff a clear indication of defendant's intention to contest the claim' ") (quoting 6 MOORE'S FEDERAL PRACTICE § 55.05(3) (2d ed.)).

According to Hartford, it made an appearance for purposes of Rule 55(b)(2). First, Hartford argues that the waiver of process executed by Coleman qualifies as a response to Rogers' formal court action. Second, Hartford contends that Rogers knew that it intended to contest the suit, because Hartford denied Rogers' claim for disability benefits, and because Rogers included "a completely frivolous count" within his complaint. Thus, according to Hartford, its waiver of process coupled with Rogers' knowledge that it intended to defend the suit entitled it to three days notice of Rogers' application for default judgment.

To decide whether Hartford's waiver of process and other actions constitute an appearance under Rule 55(b)(2), we begin by considering the procedural framework established by the Federal Rules of Civil Procedure. After filing a complaint, the Rules require the plaintiff to serve the defendant with process. See FED.R.CIV.P. 4(m) (requiring dismissal of a case in which the plaintiff does not accomplish service within 120 days after filing the complaint, unless the plaintiff can show good cause for not doing so). Until the plaintiff serves the defendant, the defendant has no duty to answer the complaint and the plaintiff cannot obtain a default judgment. See Broadcast Music, Inc. v. M.T.S. Enter., Inc., 811 F.2d 278, 282 (5th Cir.1987) ("No person need defend an action nor suffer judgment against him unless he has been served with process and properly brought before the court."). Once the plaintiff effects service of process, however, Rule 12 is triggered and then the defendant must answer the complaint or risk default. See FED R. CIV. P. 12 (requiring a defendant located within the United States who waives formal service of process under Rule 4(d) to answer the complaint within sixty days of the date that the plaintiff sent the request for waiver). This procedural framework implies that a defendant can not make an appearance for purposes of Rule 55(b)(2) until after the plaintiff effects service and the defendant becomes susceptible to default.

We note that mere acceptance of formal service of process cannot constitute an appearance for purposes of Rule 55(b)(2). If we construed the phrase that broadly, then every defendant would become entitled to notice, because the act that makes a defendant susceptible to default--acceptance of service--would also constitute an appearance. Under such a reading, a defendant could...