Coon v. Grenier

• Decision Date: 05 December 1988
• Docket Number: No. 88-1658,88-1658
• Parties: Scott COON, Plaintiff, Appellee, v. Robert P. GRENIER, Defendant, Appellant. . Heard
• Court: U.S. Court of Appeals — First Circuit

Page 73

867 F.2d 73

13 Fed.R.Serv.3d 96

Scott COON, Plaintiff, Appellee, v. Robert P. GRENIER, Defendant, Appellant.

No. 88-1658.

United States Court of Appeals, First Circuit.

Heard Dec. 5, 1988.

Decided Feb. 2, 1989.

John A. McQueeney, with whom, Higgins & Slattery, was on brief, for defendant, appellant.

J. Joseph Nugent, Jr., for plaintiff, appellee.

Before CAMPBELL, Chief Judge, COFFIN and SELYA, Circuit Judges.

SELYA, Circuit Judge.

We are called upon to decide whether an entry of default may stand in the face of unsuccessful efforts below to remove it. Because we believe that, in the circumstances of this case, good cause existed to set aside the default, we reverse the decision of the district court and remand for further proceedings.

I

Plaintiff-appellee Scott Coon was injured in a traffic accident in Bellingham, Massachusetts on the first of March, 1985. On July 25, 1986, he initiated this action in the United States District Court for the District of Rhode Island against the driver of one of the cars, defendant-appellant Robert P. Grenier. Jurisdiction was premised on diversity and amount, 28 U.S.C. Sec. 1332(a), Coon and Grenier being citizens of Massachusetts and Rhode Island respectively. ¹ What ensued was a string of failed attempts at service, ultimately building to an entry of default.

Coon was unable to locate or serve Grenier at 30 Chalapa Avenue in July 1986. His attorney corresponded with the postal service and was informed--erroneously, as matters turned out--that Grenier's forwarding address was unknown. ² Contact with the Rhode Island Registry of Motor Vehicles (RMV) revealed that Grenier had defaulted on his statutory obligation to provide the RMV with his current address. ³ Coon's attorney wrote at least one letter to Grenier's liability insurance carrier in an effort to ascertain his whereabouts, but the inquiry went unanswered. Throughout, plaintiff acted diligently in obtaining extensions of the 120-day service period. See Fed.R.Civ.P. 4(j).

On January 6, 1987, the district court granted Coon's motion for substituted service. The court adopted plaintiff's suggestion that service upon Grenier be accomplished in two ways: (1) by tacking the summons and complaint to the front door at 30 Chalapa Avenue; and (2) by certified mail sent to defendant at the same address. On February 18, 1987 the papers were nailed to the portal. The mailing was sent but no return receipt was ever received. The rest is predictable: appellant failed to answer the complaint; Coon requested an entry of default over a year later; the clerk of the district court obliged on March 25, 1988. At about the same time, plaintiff caused process to be served directly against Grenier's insurer. The insurer filed a timely answer on its own behalf. ⁴

On May 13, 1988 Grenier--having been notified of the lawsuit for the first time by his insurer's counsel--moved to vacate the entry of default. He filed two affidavits, one indicating that he had never been aware of, or served in, the suit; and the second detailing the existence of what he claimed to be a meritorious defense. On June 8, the district court heard arguments, refused to vacate the default and, following proof of claim, entered judgment against Grenier for $80,000.

II

Action upon a motion to set aside an entry of default lies within the sound discretion of the district court. United States v. One Urban Lot, Etc., 865 F.2d 427, at 429 (1st Cir.1989); Smith & Wesson v. United States, 782 F.2d 1074, 1083 (1st Cir.1986); Marziliano v. Heckler, 728 F.2d 151, 156 (2d Cir.1984); United States v. 147 Division St., Located in Woonsocket, R.I., 682 F.Supp. 694, 697 (D.R.I.1988); Phillips v. Weiner, 103 F.R.D. 177, 179 (D.Me.1984). While the exercise of discretion is, of course, bounded by the specific circumstances of each case, the frontier is staked out by the "good cause" criterion of Fed.R.Civ.P. 55(c). ⁵

"Good cause" is a mutable standard, varying from situation to situation. It is likewise a liberal one--but not so elastic as to be devoid of substance. It derives its shape both contextually and in comparison with the more rigorous standard applicable to attempts to vacate judgments under Fed.R.Civ.P. 60(b); the "good cause" threshold for Rule 55(c) relief is lower, ergo more easily overcome, than that which obtains under Rule 60(b). See Meehan v. Snow, 652 F.2d 274, 276 (2d Cir.1981); Phillips, 103 F.R.D. at 179. Thus, notwithstanding the deference due to this--as other--discretionary decisions, see Marziliano, 728 F.2d at 156, a reviewing tribunal should not stay its hand if the district court errs by reading "good cause" too grudgingly. See United States v. One Parcel of Real Property, 763 F.2d 181, 183 (5th Cir.1985). Nor does "[a]n abuse of discretion need [to] be glaring to justify reversal...." Keegel v. Key West & Caribbean Trading Co., 627 F.2d 372, 373-74 (D.C.Cir.1980).

Allowing an entry of default to be set aside on a showing of reasonable justification is in keeping both with the philosophy that actions should ordinarily be resolved on their merits, One Parcel, 763 F.2d at 183; Meehan, 652 F.2d at 277; American & Foreign Ins. Ass'n v. Commercial Ins. Co., 575 F.2d 980, 982 (1st Cir.1978); 147 Division St., 682 F.Supp. at 697, and with the command of the Civil Rules themselves. See Fed.R.Civ.P. 1 (rules "shall be construed to secure the just ... determination of every action"). These policy considerations, we suggest, are at their zenith in the Rule 55(c) milieu. Early in the case, as when a default has been entered but no judgment proven, a liberal approach is least likely to cause unfair prejudice to the nonmovant or to discommode the court's calendar. Cf. Phillips, 103 F.R.D. at 179 (liberality justified under Rule 55(c) because entry of default a clerical act and not a final judgment). In these circumstances, a district court should resolve doubts in favor of a party seeking relief from the entry of a default. Gross v. Stereo Component Systems, 700 F.2d 120, 122 (3d Cir.1983); 147 Division St., 682 F.Supp. at 697.

III

In that spirit, then, we proceed to analyze the quantum and quality of appellant's "cause" to see if it was "good," that is, if it warranted removal of an entry of default. We do not venture to set forth any precise formula, because we recognize that each case must necessarily turn on its own unique circumstances. Nonetheless, some general guidelines seem to us to have fairly universal application. We agree with the Fifth Circuit, for example, that: "In determining whether to set aside a default decree, the district court should consider whether the default was willful, whether setting it aside would prejudice the adversary, and whether a meritorious defense is presented." One Parcel, 763 F.2d at 183; accord One Urban Lot, at 429 (citing treatise); Marziliano, 728 F.2d at 156 (citing further authority); Meehan, 652 F.2d at 277; cf. Feliciano v. Reliant Tooling Co., 691 F.2d 653, 656 (3d Cir.1982) (similar; removal of default judgment). That compendium is by no means exclusive; a court may also examine into such things as the proffered explanation for the default, the good faith of the parties, the amount of money involved, and the timing of the motion. See, e.g., Phillips, 103 F.R.D. at 179.

In this instance, the district court decided the motion from the bench and made very few findings. Be that as it may, an inference of willfulness on Grenier's part seems unsupportable. He asserts that he did not learn of the pendency of this action until after the clerk entered the default (and shortly before filing his motion). This assertion is not contradicted either directly or circumstantially. Despite plaintiff's free-floating insinuations, the record contains nothing indicating that Grenier purposely withheld his address, deliberately tried to conceal his whereabouts, or consciously sought to evade process. Defendant's explanation--which is simply that he moved--is a plausible one. To be sure, he should have changed his address on the RMV's records--but in this case, nothing suggests that the district court felt such failure was deliberate as opposed to merely negligent. Indeed, the court appears to have accepted Grenier's explanation, "of the fact that he didn't know" of the suit or of the requirement that he notify the RMV of his address change. See Transcript of June 8, 1988 Hearing (TH) at 12. The failure to file a motor vehicle form, standing alone, hardly seems a sufficient basis for inferring evasion of process, especially since the relevant state statute, R.I.Gen.Laws Sec. 31-3-34, quoted supra note 3, was apparently not designed to facilitate service of process. ⁶ The other record evidence which bears upon defendant's intention likewise intimates no motive to evade: Grenier was insured; and he did file a change-of-address form with the post office when he moved, see supra note 2.

The district court did not discuss the question of prejudice, but we are at a loss to deduce how any might exist. While Coon asserts that his case is "now compromised due to the inordinate passage of time since the accident ...," Appellee's Brief at 13, the lament is altogether conclusory. Plaintiff does not claim that witnesses have died, that memories have dimmed beyond refreshment, that some discovery scheme has been thwarted, or that evidence has been lost. We will not infer prejudice merely from the passage of the amount of time involved here--especially in a case like this one, where plaintiff was apparently content to wait for close to a year and a half before instituting suit, and then waited for over another full year between effecting substituted service and requesting entry of default. See Keegel, 627 F.2d at 374 ("[t]hat setting aside the default would delay satisfaction of plaintiffs' claim" is insufficient to show prejudice); cf. One Parcel, 763 F.2d at 183 (simply requiring a party to litigate the action does not amount to...